Facebook has successfully fended off two US antitrust suits that had sought to unwind the social media giant’s acquisitions of Instagram and WhatsApp. The victory helped propel Facebook’s market capitalisation above $1tn for the first time.
The US Federal Trade Commission (FTC) and 48 state attorney generals had filed parallel complaints against Facebook. The FTC argued that Facebook had monopoly power in the social networking market, a position that the District Court for the District of Columbia found to be “legally insufficient”.
“It is almost as if the agency [the FTC] expects the Court to simply nod to the conventional wisdom that Facebook is a monopolist,” the court said in a filing.
The court also found that the 48 states had taken too long to contest Facebook’s 2012 acquisition of Instagram and 2014 purchase of WhatsApp. However, the court stated that it was on “firmer ground” to scrutinise those acquisitions in a rebuttal to Facebook’s argument.
Facebook may yet face another antitrust challenge, with the judge giving the FTC until 29 July this year to file a fresh and more detailed complaint.
A Facebook spokesperson said: “We are pleased that today’s decisions recognise the defects in the government complaints filed against Facebook.”
A spokesperson for the New York Attorney General’s office told Reuters it was “considering our legal options”.
The FTC is also assessing its options.
In March Facebook filed motions to dismiss the antitrust lawsuits brought by the FTC and state attorneys general.
The dismissed Facebook antitrust suits sent the advertising behemoth’s shares up by 4%, helping it join the $1 trillion club for the first time in a sign that investors welcomed the decision.
Facebook’s legal victory comes amid a growing clampdown by regulators on Big Tech companies such as Amazon, Google and Apple.
Laura Petrone, senior analyst in the thematic research team at GlobalData, described the dismissed Facebook antitrust suit as a “big setback” for regulators.
She added that it demonstrates how existing antitrust rules are “not fit for purpose in the digital era”. Current competition laws require proof that consumers are being harmed, such as a monopoly leading to higher prices for a product or service.
However, many digital companies – including Facebook – do not charge consumers, making it difficult to bring successful antitrust suits.
However, five bills with bipartisan support aimed at revamping antitrust rules for digital companies have recently been introduced by members of the US House of Representatives.
“The battle against digital monopolies could be fought in Congress rather than in court,” said Petrone.