An antitrust case against Facebook gets a second chance

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Last June, James Boasberg, a judge with US District Court for the District of Columbia, threw out an antitrust case brought by the Federal Trade Commission against Facebook . In the lawsuit, the FTC alleged that Facebook, which has since changed its corporate name to Meta, has an illegal monopoly on social-networking services; that it built this monopoly in part by acquiring competing services, such as WhatsApp and Instagram; and that it uses its monopoly position in an anti-competitive way against other companies. In his dismissal of the case, Boasberg said that the federal regulator had failed to provide enough tangible evidence that Facebook had anything approaching a monopoly. (A similar antitrust lawsuit filed by 40 state attorneys-general was also dismissed by Boesberg last June, but the states have not yet filed an appeal.) The judge left the door open for the FTC, however, telling the agency it was welcome to try again, if and when it accumulated the evidence he sought. 

On Tuesday, Boasberg ruled that the majority of a new FTC lawsuit can proceed, citing evidence of a monopoly position provided by the agency in its revised submission. The FTC’s first attempt at a lawsuit “stumbled out of the starting blocks,” the judge said; the facts provided by the agency this time, however, were “far more robust and detailed than before, particularly in regard to the contours of defendant’s alleged monopoly.” Boasberg blocked a portion of the case, in which the FTC alleged that Facebook harmed competitors by illegally restricting access to its platform; Facebook, Boasberg said, “abandoned the policies in 2018, and its last alleged enforcement was even further in the past.

Some critics of the FTC’s case, such as technology analyst Ben Thompson, have questioned the accuracy of the agency’s attempts to define a specific market for “personal social networking” over which Facebook allegedly has a monopoly. (Thompson, at his Stratechery blog, wrote that the FTC’s definitions “don’t reflect reality” and “have no relation to the actual market for online services.”) Boasberg, however, found no fault with the FTC’s market definition. In his first ruling, he said that, “while there are certainly bones one could pick with the FTC’s market-definition allegations, the Court does not find them fatally devoid of meat.” In terms of whether Facebook has anything approaching a monopoly, the judge seemed convinced by the addition of data from Comscore, a traffic measurement company, which said, “Facebook’s share of DAUs [daily average users] of apps providing personal social networking services in the United States has exceeded 70 percent since 2016.”

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In its complaint, the FTC argues that acquiring Instagram for $1 billion in 2012 and WhatsApp for $19 billion in 2014 were illegal attempts by Facebook to protect its monopoly position. In his recent decision, Boasberg said that, while he wasn’t prepared to accept the argument as true, he was willing to let it proceed to trial. “The agency will need to substantiate these allegations at later stages in the litigation—likely with expert testimony or statistical analysis,” the judge said. “But lack of proof at this juncture does not equate to impermissible speculation.” In its defense against the FTC’s claims, Facebook argued that Comscore’s figures on market share are not accurate and therefore can’t be relied upon, but Boasberg said that the company “will be given ample opportunity to advance such arguments down the line, perhaps in a potential ‘battle of the experts.'”

In its motion to dismiss the case, Facebook also argued that Lina Khan, chair of the FTC, had an “axe to grind” against the company, based on comments she made before she was named to her current position. (Facebook had previously petitioned the federal agency asking Khan to recuse herself from the antitrust case.) Boasberg said in his recent ruling that this arrow from Facebook “misses its target,” since Khan was acting in a prosecutorial capacity when she made her earlier comments, not a judicial one. Facebook has also argued that the FTC shouldn’t be allowed to complain about its purchases of Instagram and WhatsApp now because it didn’t raise objections to them at the time.

“Whether the FTC will be able to prove its case and prevail at summary judgment and trial is anyone’s guess,” Boesberg wrote. “The Court declines to engage in such speculation and simply concludes that at this motion-to-dismiss stage, where the FTC’s allegations are treated as true, the agency has stated a plausible claim for relief.” The judge added that while the regulatory agency “may well face a tall task down the road in proving its allegations, the court believes that it has now cleared the pleading bar and may proceed to discovery.”

Below, more on Facebook:

• Not a utility? A number of antitrust scholars have argued that Facebook should be regulated as a utility, but Os Keyes, a PhD candidate at the University of Washington argues that this is easier said than done, since utilities typically don’t serve billions of people in hundreds of countries around the world. “The bigger issue is that treating Facebook as a public utility requires not only answering the question of whether it’s a utility but which ‘public’ it should be accountable to—and that’s a much more difficult problem,” they write.
• Scrutiny: Meta, Facebook’s parent company, fell by more than 35 spots on an annual ranking of best places to work in the US, as measured by Glassdoor, an employment review company. Previously in 11th place, the social platform dropped to 47th place, the lowest it has ever been in the 12 years it has been part of the rankings. “Glassdoor said employees spoke highly of the company for granting them autonomy in their work,” CNBC reported, “but many also described negative issues like unwanted public scrutiny, lack of action from leadership on platform issues and questions about the company’s future.”
• Data access: I did a “slow interview” recently with Nate Persily on CJR’s Galley discussion platform. Persily is a law professor at Stanford and co-director of the Stanford Programject on Democracy and the Internet, and a former co-founder and co-chair of Social Science One, a partnership between researchers and Facebook that was designed to make it easier for social scientists to get access to data from the company. Persily talked about why he quit that project, and about the proposed legislation he helped craft that would force companies like Facebook and Google to give researchers access to their data.
• Definitions: Facebook has removed ads for a breastfeeding workshop, pants designed for postpartum mothers, and educational materials about sexual consent, all of which were mistakenly identified as “adult sexual content,” according to a report from the Center for Intimacy Justice, as reported by the New York Times. The organization’s founder interviewed employees and leaders at more than 35 companies focused on issues related to women’s sexual health, and found that “all 60 companies had ads rejected by Facebook, and about half of them said their accounts had been suspended at some point.”

 

Other notable stories:

• Yesterday, Evan Smith revealed that he is stepping down as chief executive of The Texas Tribune, a nonprofit news organization he co-founded and has led for 13 years, the New York Times reported. Smith, who is 55, said he will leave the company by the end of the year, but will stay on as an adviser into 2023. While he said he had no firm plans for what he wanted to do next, he also told the Times, “I don’t think I’m done wanting to make the world better through journalism.” Smith founded the Tribune in 2009 with John Thornton, a venture capitalist, and Ross Ramsey, a journalist and media entrepreneur.
• Also yesterday, Mark Bauman, a former foreign correspondent for ABC News, and Laura McGann, a former editorial director at Vox,  announced a news startup called Grid. Bauman, who has also worked at National Geographic magazine and the Smithsonian Institution, told the New York Times that he started the site because he was “frustrated with the coverage of important issues.” Bauman started the project in August of 2020, and has raised about $10 million in funding from Abu Dhabi-based International Media Investments and Brian Edelman, a tech executive. The startup has hired a team of about 20 journalists, including editor-at-large Matt Yglesias, a co-founder of Vox.
• Protocol profiles Nandini Jammi, one of the founders of the Check My Ads Institute, a nonprofit dedicated to confronting advertisers whose products finance right-wing disinformation. Jammi co-founded Sleeping Giants, which started as a Twitter account with much the same mission. “Her latest venture, the nonprofit Check My Ads Institute, which she co-founded with former marketer Claire Atkin last year, is taking aim not at advertisers but ad exchanges, which hold most of the power in determining where ads actually show up on the internet,” Issie Lapowsky writes.
• The Associated Press announced that it plans to sell NFTs (non-fungible cryptocurrency tokens) of its photojournalists’ work in collaboration with a company called Xooa, the Verge reports. The wire service said that it sees NFTs as a way for collectors to “purchase the news agency’s award-winning contemporary and historic photojournalism” and that the virtual tokens will be released at “broad and inclusive price points.” Other media organizations have experimented with NFTs, including Quartz and The New York Times. Meanwhile, Dirt, a newsletter on the entertainment industry that is published by Kyle Chayka and Daisy Alioto, has launched a DAO or “distributed autonomous organization” that will be funded and controlled by members who own Dirt NFTs.
• At Axios, Sara Fischer spoke with a number of media analysts who say the rise of more and more paywalled news sites is going to have a negative impact on society. Rodney Benson, chair of New York University’s Department of Media, Culture, and Communication said that, “obviously, long-term, this is going to have tremendously negative civic effects,” including inattention to poor and marginalized audiences, which he said we are already experiencing. Kathleen Hall Jamieson, director of the Annenberg Public Policy Center and founder of Factcheck.org, said that paywalls are a natural response to revenue demands, but “the problem is that we can’t have so much behind paywalls, that the public can’t afford to break through.”
• More than 80 fact-checking organizations from around the world have written an open letter to Susan Wojcicki, the chief executive of YouTube, in which they complain that the video-sharing site, which is owned by Google, is not taking effective steps to stop the spread of misinformation on its platform. “YouTube is allowing its platform to be weaponized by unscrupulous actors to manipulate and exploit others, and to organize and fundraise themselves,” the letter says. It urges the company to “elaborate a roadmap of policy and product interventions to improve the information ecosystem.”
• Kirstin McCudden of the Freedom of the Press Foundation writes in CJR about press-freedom violations in the US last year, as catalogued by the USPress Freedom Tracker. “While we did not see the scope of national social-justice protests of 2020—a year in which journalists were arrested or assaulted on average more than once a day—2021 still outpaced the years before it for press-freedom violations,” she writes. “More than 140 assaults of journalists in 2021 captured in our ‘Physical Attack’ category outpaces assaults from 2017 to 2019 combined.”
• David Jordan, the BBC’s director of editorial policy, told the British parliament that he believes the broadcaster should “represent all points of view,” including the view that the Earth is flat. “We are very committed to ensuring that viewpoints are heard from all different sorts of perspectives and we don’t subscribe to the ‘cancel culture’ that some groups would put forward,” he said, according to a BBC report. “Flat-earthers are not going to get as much space as people who believe the Earth is round, but very occasionally it might be appropriate to interview a flat-earther,” he added.

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Mathew Ingram was CJR’s longtime chief digital writer. Previously, he was a senior writer with Fortune magazine. He has written about the intersection between media and technology since the earliest days of the commercial internet. His writing has been published in the Washington Post and the Financial Times as well as by Reuters and Bloomberg.