Facebook rulings spark bipartisan calls for US competition law change
Senior members of Congress have renewed calls to overhaul US competition law following the failure of two landmark attempts to break up Facebook.
Democrats and Republicans criticised the decision by a federal court on Monday to dismiss one complaint against the social media company by the Federal Trade Commission and another by individual states.
Several said the judgment illustrated the need to rewrite antitrust rules, with six major bills designed to rein in the power of Big Tech being debated on Capitol Hill.
Amy Klobuchar, Democratic chair of the Senate antitrust committee, tweeted: “The ruling shows why our antitrust laws need to be updated after years of bad precedent. We can’t meet the challenges of the modern digital economy with pared down agencies & limited legal tools.”
Ken Buck, the most senior Republican on the House antitrust committee, said: “Congress needs to provide additional tools and resources to our antitrust enforcers to go after Big Tech companies engaging in anti-competitive conduct.”
Many experts expect the FTC to refile its case against Facebook following the federal judge’s decision on Monday.
In a bruising ruling, Judge James Boasberg in Washington, DC had said the FTC’s lawsuit was “legally insufficient” and the federal agency had “failed to plead enough facts to plausibly establish” that Facebook had monopoly power over the social networking market.
“[W]hatever 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,” he wrote.
The FTC will have 30 days to file a new complaint. The regulator said in a statement that it was “closely reviewing the opinion and assessing the best option forward”.
Boasberg also dismissed a similar case pursued by a group of 46 states and two other jurisdictions — led by New York attorney-general Letitia James — on the basis that any alleged violations took place too long ago. The New York attorney-general is reviewing the decision.
Facebook’s share price jumped more than 4 per cent on the news to a record high of $357.36, with the company surpassing a $1tn market capitalisation for the first time.
“We are pleased that today’s decisions recognise the defects in the government complaints filed against Facebook,” the social media group said, adding that Facebook “competes fairly every day to earn people’s time and attention”.
The judgment was a setback for regulators, who in December had accused the company of anti-competitive conduct, including a “buy or bury” approach of strategically snapping up rivals or cutting off services to those that threatened its monopoly power.
The FTC said at the time that it was seeking penalties including a forced break-up of Facebook from Instagram and WhatsApp, acquisitions the social media giant made in 2012 and 2014 for $1bn and $19bn, respectively.
But the judgment illustrated in particular the challenges faced by those attempting to redefine US antitrust laws for the digital era, as members of Congress debate legislation that would make it easier to prosecute big technology companies.
Regulators have traditionally proved that companies have abused their market power by showing how the groups raised prices unfairly for their customers.
But academics such as Lina Khan, a prominent Big Tech critic and the newly appointed FTC chair, have argued that companies can abuse their market power without charging anything, whether by degrading services or demanding that customers hand over more personal data.
“Facebook’s power is obvious, and yet we have a judge here getting into arcane details of what makes up the market,” said William Kovacic, a former FTC chair. “It will be held up as the precise example of why we need to change the law.”