FTC Drags Facebook, Dubs it an Illegal Monopoly


The Federal Trade Commission (FTC) has fired back at Facebook’s (FB) bid to dismiss the regulator’s lawsuit seeking to break up the social media giant, as Big Tech continues to face scrutiny from the government.

The commission said in a filed document that “Facebook holds monopoly power over personal social networking (‘PSN’) services in the U.S., and is violating the antitrust laws by maintaining its monopoly through means other than competition on the merits.”

In March, Facebook argued in its motion to dismiss that the FTC’s lawsuit was legally defective because it failed to identify a relevant market in which the company purportedly holds a monopoly.

According to Facebook, because its services are free of charge, no PSN market exists for the purpose of substantiating an antitrust claim.

Facebook also said the agency neglected to credibly allege that it had acquired monopoly power over a market, and failed to make reasonable allegations that the company had engaged in unlawful exclusionary conduct.

Facebook said the FTC also had no authority to sue over actions it had already approved: Facebook’s acquisition of messaging service WhatsApp in 2014 for $19 billion, and its acquisition of photo-sharing site Instagram in 2012 for $1 billion.

The FTC’s lawsuit is seeking to force Facebook to break off WhatsApp and Instagram. The social media giant also faces a lawsuit from dozens of attorneys general claiming it’s violating antitrust law by buying up competitors and depriving consumers of alternatives that would better protect their privacy

The controversial stance over whether an antitrust case can go forward where neither product nor service prices are at issue is expected to frustrate the case against Facebook and Big Tech antitrust actions, including those pending against Google (GOOG, GOOGL).

Still, experts say that it’s a long shot for Facebook to get the case dismissed at this stage.

Free or not, the FTC argues in its filing that courts have condemned monopolists for resorting to anticompetitive practices similar to the actions of Facebook, and that a relevant market does in fact exist because PSN services in the U.S. are not “reasonably interchangeable” with other services.