A federal court on Monday dismissed the Federal Trade Commission’s antitrust complaint against Facebook, a severe blow to the agency’s complaint, which could have resulted in Facebook selling Instagram and WhatsApp.
Facebook’s shares rose more than 3% on Monday after the complaint was dismissed, bringing the social media company’s market cap to above $ 1 trillion for the first time.
“While the court here does not agree with all of Facebook’s allegations, it ultimately agrees that the agency’s lawsuit is legally inadequate and must therefore be dismissed,” the US District Court file for the District of Columbia said. “The FTC has failed to provide enough facts to plausibly support a necessary element of all of its Section 2 claims – that Facebook has monopoly power in the Personal Social Networking (PSN) service market.”
In the complaint, the court found that the FTC had failed to prove that Facebook maintained a monopoly.
“The Court agrees that the first – having monopoly power in the market for personal social networking services (as defined by the Agency) – is not adequately relied on here,” the file reads. “It does not take more to conclude that the lawsuit must be dismissed.”
The court also disagreed with Facebook’s argument that the FTC has no authority to attack the Instagram and WhatsApp acquisitions that took place in 2012 and 2014. On the contrary, it ruled that the FTC can still move to dispose of these acquisitions – but only if it succeeds in its legal arguments over Facebook’s monopoly power.
The court found that the FTC did not provide enough detailed data to prove that Facebook has market power in the loosely defined market for personal social networking services.
“The lawsuit undoubtedly relates to specific assertions of fact relating to consumer switching preferences,” the court wrote. “These claims – which at no point in the past decade provide an estimated actual number or range for Facebook’s market share – are ultimately implausible to plausibly demonstrate Facebook’s market power.”
The filing noted that the FTC’s complaint lacked specific evidence.
“The FTC’s complaint says almost nothing concrete about the key question of how much power Facebook actually had and still has in a properly defined antitrust product market,” the files say. “It’s almost like the agency would expect the court to simply nod at the traditional notion that Facebook is a monopoly.”
The verdict is not necessarily the end of the process. The court acknowledged that the FTC may be able to address the weaknesses in its reasoning and left open the option to file an amended lawsuit and proceed with the lawsuit.
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