The Federal Trade Commission’s antitrust complaint against Facebook was dismissed by a federal court, which found that the agency had failed to provide evidence to support its claim that Facebook has a monopoly in social networking.
Judge James Boasberg of the US District Court for the District of Columbia said the FTC “failed to plead enough facts to plausibly establish … that Facebook (FB) has monopoly power in the market for Personal Social Networking (PSN) Services” in an opinion released Monday afternoon.
According to Boasberg, the FTC did not provide enough evidence to support its claim that Facebook controls a “60 percent-plus” share of the social media market.
Following the news, Facebook’s stock rose more than 4% on Monday, putting the company’s market value above $1 trillion for the first time.
The Federal Trade Commission had claimed that Facebook had broken antitrust laws by acquiring nascent startups like Instagram that it saw as a threat to its dominance, as well as preventing others from using Facebook’s services.
“We are pleased that today’s decisions recognize the defects in the government complaints filed against Facebook,” the company said in a statement.
According to FTC spokesperson Lindsay Kryzak, the agency is closely reviewing the judge’s decision and determining its next steps.
The decision is a setback for antitrust regulators who had requested that the company be broken up. However, while the judge dismissed the FTC’s complaint, he refused to dismiss the case as a whole, stating that the FTC’s lawsuit could be amended to address the issues.
Boasberg’s decision, which provided some relief for Facebook in the face of constant scrutiny from regulators around the world, prompted more calls for Congress to update the country’s antitrust laws.
“Today’s development in the FTC’s case against Facebook shows that antitrust reform is urgently needed,” tweeted Rep. Ken Buck, a leading Republican on the House Judiciary Committee. “Congress needs to provide additional tools and resources to our antitrust enforcers to go after Big Tech companies engaging in anticompetitive conduct.”
Last week, the committee approved a package of landmark bills that would give antitrust regulators at the Federal Trade Commission and the Department of Justice the authority to break up Big Tech platforms like Amazon, Apple, Facebook, and Google.
House lawmakers accused Facebook of targeting small startups like Instagram early in their lifecycles, believing they were a threat to Facebook’s power, according to a groundbreaking report released last summer. Facebook’s so-called “buy-or-bury” strategy is said to have helped the company maintain its position as a top-tier social networking service.
In a separate decision, Boasberg dismissed an antitrust lawsuit brought by dozens of state governments against Facebook, claiming that the plaintiffs waited too long to challenge Facebook’s Instagram and WhatsApp acquisitions, which were completed in 2012 and 2014, respectively.
“We are reviewing this decision and considering our legal options,” a spokesperson for New York Attorney General Letitia James, one of the case’s most prominent state AGs, said.
The states and the FTC also claimed that Facebook was acting anti-competitively by denying competing apps access to the social media giant’s platform in their lawsuits. In his Monday opinion, Boasberg stated that Facebook’s policy of preventing interoperability with third-party apps is not illegal. He admitted that while Facebook may have broken antitrust laws in enacting its policy, the lawsuits were filed too late to be of any use.
Judges rarely dismiss federal or state lawsuits at this early stage, according to William Kovacic, a former FTC chairman.
“You don’t expect to get knocked out in the first inning,” he said. But the FTC would have known to expect a challenging court battle, Kovacic added. “If this were a sporting match, it’s a bad start to the match. But it doesn’t mean the end of the match, by any means.”