WASHINGTON— Facebook Inc.
FB 0.08%
on Wednesday asked a federal judge to dismiss antitrust lawsuits by the Federal Trade Commission and Attorney General, arguing that government enforcers have no valid basis for claiming the social media giant is suppressing competition.
The FTC “ignores the reality of the dynamic, intensely competitive high-tech industry in which Facebook operates,” the company says, rejecting the commission’s case. In a second motion, Facebook argues that the state’s case “cannot claim that its citizens paid higher prices, that production was reduced, or that any objective measure of quality decreased as a result of Facebook’s actions.”
The company’s filing in the U.S. District Court in Washington is the first legal salvo since the FTC and 46 states sued Facebook in December over allegations that the company illegally preserved its monopolistic status by freezing and buying up potential competitors.
The FTC and the states claim that Facebook prefers to buy companies rather than compete with them, with many of their cases focusing on the company’s acquisitions of WhatsApp and Instagram, the photo-sharing platform.
The FTC had earlier allowed Facebook to make these acquisitions, but argues that time has shown that the company used the transactions to hedge a monopolistic position. The states argue that a lack of competitors to Facebook has led to consumer harm, including through the weakening of privacy protections.
Facebook will have to meet a high legal standard to convince a federal judge to drop the cases before the trial. In order to enforce a motion of dismissal, the company must show that the plaintiffs’ factual allegations about the nature of the market, even if accepted as true, do not constitute a valid legal claim.
The FTC and the states must respond to the motions in April.
New York Attorney General Letitia James has unveiled a comprehensive antitrust case against Facebook by the Federal Trade Commission and a dual group of 46 state attorneys general, directing the company’s tactics against competitors. Photo: Saul Loeb / AFP via Getty Images (video from 12/9/20
Facebook noted in its newspapers that the FTC lawsuit came at a 3-2 vote and that it was brought at a time when the company was facing incessant criticism “due to cases unrelated to antitrust issues.”
According to the company, the commission has not yet defined a relevant market that is allegedly dominated by Facebook. Almost all of Facebook’s revenue comes from advertising, which is a relentlessly competitive market, the company said.
Facebook also argued that the FTC did not plausibly claim that the company had monopoly power because the government could not show that the company was raising prices or limiting production, as “Facebook’s products are offered for free and in unlimited quantities.”
The company has repeatedly stressed that the commission previously allowed it to access Instagram and WhatsApp in 2012 and 2014, respectively. The FTC at the time reviewed those transactions and decided not to challenge them.
The FTC and the states claim that the acquisitions have led to the elimination of emerging, independent technology companies, whose popularity has enabled them to become important Facebook competitors.
The case of the commission, if successful, could lead to Facebook withdrawing the transactions.
Not all federal and state affairs focused on Facebook’s acquisitions. Antitrust enforcers also allege that Facebook has engaged in other competitive conduct, including by breaking access to its third-party developer platform.
In response, Facebook said in its legal papers that the Supreme Court precedent has made it clear that it is not obligated to give other businesses access to its platform.
The company attacked the case of the states, arguing that the attorney general did not have the right to file a case on behalf of their citizens, claiming that the states had waited too long to sue.
Write to Brent Kendall by [email protected]
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