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FTC’s Facebook Antitrust Complaint Dismissed in District Court

The commission failed to show the social media giant has a monopoly over personal networking, the court rules

The Federal Trade Commission’s antitrust lawsuit against Facebook was dismissed by the U.S. District Court of Washington, D.C. on Monday.

The FTC, alongside 48 state attorneys general, sued Facebook in December, claiming it not only has a social network monopoly, but that it has maintained that position primarily through its acquisitions of Instagram and WhatsApp. Facebook bought Instagram for $1 billion in 2012, and two years later, paid $19 billion for WhatsApp. (Both deals were approved by the FTC.)

“Although the Court does not agree with all of Facebook’s contentions here, it ultimately concurs that the agency’s complaint is legally insufficient and must therefore be dismissed,” the court said in its filing. “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.”

The court, in its filing, said the FTC offered vague metrics that didn’t back up its assertion Facebook controlled “60%-plus” of the U.S. social media market.

“Whatever it may mean to the public, ‘monopoly power’ is a term of art under federal law with a precise economic meaning: the power to profitably raise prices or exclude competition in a properly defined market,” the filing said. “To merely allege that a defendant firm has somewhere over 60% share of an unusual, nonintuitive product market — the confines of which are only somewhat fleshed out and the players within which remain almost entirely unspecified — is not enough. The FTC has therefore fallen short of its pleading burden.”

Previously, the FTC had claimed Facebook hampered its competitors by preventing them from using its APIs, allowing Facebook to build an “unmatched position” in the social media space. The FTC and states suing Facebook also claimed its social media dominance has harmed consumers. Back in March, Facebook called for the case to be thrown out, claiming the FTC failed to prove the company has harmed consumers or that it’s built a social media monopoly.

On Monday, the court sided with Facebook, although it did say the FTC was allowed to file an amended complaint. The court also said it rejects Facebook’s argument the FTC “lacks authority” to seek injunctive relief against its purchases of Instagram and WhatsApp — leaving the door open for the FTC to adjust its complaint.

Wall Street was apparently happy with the decision; soon after the courts’ ruling, Facebook’s stock price jumped from about $343 per share to a new all-time high of $357.48 per share.