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Plaintiffs Allege Facebook Has Monopolized Social Network and Social Media Markets

Facebook's app icon on a smartphoen screen.

Bangkok, Thailand - July 13, 2019 : iPhone user touching Facebook logo on iPhone screen to open the app.

On Thursday in the Northern District of California, users of Facebook and its other products, including Instagram, Messenger, and WhatsApp, filed a putative class-action complaint against Facebook alleging that the social media giant violated the Sherman Act through an effort to monopolize the social media and network markets. The plaintiffs allege they were harmed through the monetization of their data, which was also used to shut out competition.

According to the complaint, while Facebook originally started “as a website that allowed college students to connect with friends on campus,” it has “since expanded exponentially and today is the largest social network and also the largest social media platform in the world.” The complaint recounted that, in July 2020, Facebook stated it has 3.14 billion monthly active users across its products. The plaintiffs averred that “Facebook has used its behemoth-status as a weapon to clear the field of any and all competitors that threaten to take away market share.”

First, the plaintiffs claimed, “Facebook consistently and intentionally deceived consumers about the data privacy protections it provided to its users.” The plaintiffs noted that when Facebook was founded, it realized that the privacy protections it promised were important to consumers in order to gain market dominance; users chose Facebook over competitors because of these privacy promises. However, the plaintiffs proffered that “Facebook concealed the scope of the data it harvested from consumers and the ways in which it used that data to squash competition.” Consequently, the plaintiffs stated that this conduct allowed Facebook to “illegally maintain a stranglehold on the Social Network and Social Media Markets.”

Secondly, according to the plaintiffs, Facebook used the data it surreptitiously collected from users “to identify nascent competitors and then ‘acquire, copy or kill’ these firms” in order to increase meaningful market shares. For example, the plaintiffs averred that “Facebook made clear that it would copy incipient competitors’ innovations and discriminatorily shut off these firms’ access to Facebook’s valuable user data if they did not sell their businesses to Facebook first.”

Facebook utilizes user data for its targeted ad system, from which it “derives enormous economic value,” the complaint said. Moreover, the plaintiffs averred that with fair competition, Facebook would have to “provide consumers greater value in return for consumers’ data, but Facebook instead took that data without providing adequate compensation to its users,” resulting in antitrust injury. Specifically, Facebook’s purported deception and acquisitions have prevented competition, which has caused users to receive “less value for their data than they would have received in some form absent the reduction. As a result, the plaintiffs proffered that Facebook’s monopoly power has harmed consumers in the relevant markets.

The plaintiffs have sought class certification, injunctive, declaratory, and equitable relief, an award for treble damages, an award for costs and fees, and other relief. The plaintiffs are represented by Quinn Emanuel Urquhart & Sullivan, LLP as well as Keller Lenkner LLC.

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