On Monday, a US District Court dealt a huge blow to the federal government’s antitrust case against Facebook by dismissing a complaint filed against the company by the Federal Trade Commission. The lawsuit, filed late last year, sought to unwind Facebook’s acquisitions of Instagram and WhatsApp. The judge also dismissed an associated case filed by a group of state attorneys general.
In its initial complaint, the FTC alleged that Facebook violated federal antitrust laws by purchasing a would-be competitor in the social media market. But in his decision to dismiss the complaint Monday, Judge James E. Boasberg wrote that the FTC offered insufficient evidence for its central claim — that Facebook wields monopoly power.
“The FTC has failed to plead enough facts to plausibly establish a necessary element of all of its Section 2 claims —namely, that Facebook has monopoly power in the market for Personal Social Networking (PSN) Services,” Boasberg wrote. “The complaint contains nothing on that score save the naked allegation that the company has had and still has a ‘dominant share of th[at] market (in excess of 60%).’”
Facebook stock surged in response to the dismissal, clearing $1 trillion in market capitalization for the first time in the company’s history.
The ruling also struck down a parallel anti-monopoly case against Facebook filed by a coalition of state attorneys general. Nearly every state attorney general signed onto a lawsuit against Facebook in December, making similar allegations as the FTC case. But Boasberg dismissed that case in an accompanying decision on Monday, holding that a specific civil law doctrine prevented the coalition from challenging acquisitions settled so many years in the past.
Notably, the judge’s dismissal of the FTC was not as final as the ruling against the states. The judge left room for a future FTC action that might unwind the Instagram and WhatsApp mergers in the future, although such an action would require a more detailed allegation of monopoly power against the company. The commission has until July 29th to file a new complaint outlining its argument regarding Facebook’s market dominance.
Facebook did not immediately respond to a request for comment from The Verge.
The court’s dismissal comes as Congress is pushing forward on sweeping antitrust reform for the tech sector. Last week, the House Judiciary Committee approved a slate of bills targeting Big Tech’s market power, including bans on large mergers and new interoperability requirements. All six measures are headed to the House floor and parallel bills are expected to be introduced in the Senate over the coming weeks.
“Today’s development in the FTC’s case against Facebook shows that antitrust reform is urgently needed,” Rep. Ken Buck (R-CO), ranking member on the House Judiciary Committee’s antitrust subcommittee, said in a tweet Monday. “Congress needs to provide additional tools and resources to our antitrust enforcers to go after Big Tech companies engaging in anticompetitive conduct.”