FTC Opposes Facebook’s Motion to Dismiss in Antitrust Lawsuit

On Wednesday, the Federal Trade Commission (FTC) filed an opposition to Facebook’s motion to dismiss the FTC’s antitrust lawsuit against the tech giant.

Previously, Facebook moved to dismiss the FTC’s suit, claiming that the agency failed to state a claim upon which relief can be granted and lacked the authority to bring the suit; additionally, Facebook noted that the FTC’s arguments requesting the court to break up Facebook are unsubstantiated. In particular, Facebook contended that the FTC has not properly alleged a relevant market, insufficiently pleaded monopoly power, and inadequately alleged unlawful exclusionary conduct.

The District of Columbia District Court filing detailed the Instagram and WhatsApp acquisitions, as well as Facebook’s platform. In its argument against Facebook’s first grounds of opposition that the FTC does not state a claim upon which relief can be granted, the FTC asserted that its complaint states a claim for monopolization. Specifically, according to the FTC, its allegations establish that “Facebook holds monopoly power in the personal social networking (‘PSN’)” in the U.S. and is “violating antitrust laws by maintaining its monopoly through means other than competition on the merits.” The FTC noted that its complaint detailed Facebook’s unlawful conduct, such as “acquiring competitive threats and deterring or hindering the emergence of rivals by imposing anticompetitive conditions on its trading partners” in violation of the Sherman Act and FTC Act. The FTC averred that Facebook “reaps massive profits from its PSN monopoly, not by offering a superior or more innovative product but because it has, for nearly a decade, taken anticompetitive actions to neutralize, hinder, or deter would-be competitors,” adding that courts have “condemned monopolists” for “resorting to similar anticompetitive practices to maintain their dominance.”

The FTC further claimed that Facebook’s first assertion regarding the FTC’s purported failure to sufficiently allege that Facebook maintained monopoly power and consumer harm fails because the FTC’s complaint adequately alleges, according to the FTC, that the “PSN services in the United States are not reasonably interchangeable with other services and thus constitute a relevant antitrust market,” that Facebook controls a significant portion of the market and is protected by major barriers to enter, and that it maintained its position via “anticompetitive means.” As a result, the FTC argued that Facebook’s motion fails on this claim.

Similarly, the FTC proffered that Facebook’s argument that the FTC lacks authority to bring the suit fails because FTC Act § 13(b) gives the FTC “statutory authority to bring suit in this Court because the Complaint’s allegations establish that the FTC has determined that it ‘has reason to believe’ that Facebook ‘is violating’ the antitrust laws.” Thus, the Commission contended that it does have the authority to bring the suit.

The FTC added that Facebook’s claims that the agency could have challenged the acquisitions sooner is unavailing because “Congress has explicitly provided that the FTC need not challenge an acquisition at its first opportunity to do so,” instead, the FTC “can challenge an acquisition ‘at any time’ under any ‘provision of law.’” The FTC also noted that it is challenging Facebook’s continuous control and maintenance of its monopoly power not only through its acquisitions, but the barriers to enter and other “anticompetitive conditions that hindered other potential rivals.”

Facebook is represented by Kellogg, Hansen, Todd, Figel & Frederick P.L.L.C.