Judge Throws Out Two Antitrust Cases Against Facebook

There’s been much jubilation in the tech industry as a result of US District judge James Boasberg (an Obama nominee, incidentally) summarily dismissing antitrust lawsuits brought against the company by the Federal Trade Commission and more than 40 states.

The judge eviscerated one of the federal government’s core arguments, that Facebook holds a monopoly over social networking, saying prosecutors had failed to provide enough facts to back up that claim. And he said the states had waited too long to bring their case, which centers on deals made in 2012 and 2014.

The judge said the F.T.C. could try again within 30 days with more detail, but he suggested that the agency faced steep challenges.

As it happens, I agree with the judge but draw different conclusions about the significance of the case. I really liked his succinct critique of it.

Although the Court does not agree with all of Facebook’s contentions here, it ultimately concurs that the agency’s Complaint is legally insufficient and must therefore be dismissed. The FTC has failed to plead enough facts to plausibly establish a necessary element of all of its Section 2 claims — namely, that Facebook has monopoly power in the market for Personal Social Networking (PSN) Services. The Complaint contains nothing on that score save the naked allegation that the company has had and still has a “dominant share of that market (in excess of 60%).” Such an unsupported assertion might (barely) suffice in a Section 2 case involving a more traditional goods market, in which the Court could reasonably infer that market share was measured by revenue, units sold, or some other typical metric. But this case involves no ordinary or intuitive market. Rather, PSN services are free to use, and the exact metes and bounds of what even constitutes a PSN service — i.e., which features of a company’s mobile app or website are included in that definition and which are excluded — are hardly crystal clear. In this unusual context, the FTC’s inability to offer any indication of the metric(s) or method(s) it used to calculate Facebook’s market share renders its vague “60%-plus” assertion too speculative and conclusory to go forward. Because this defect could conceivably be overcome by re-pleading, however, the Court will dismiss only the Complaint, not the case, and will do so without prejudice to allow Plaintiff to file an amended Complaint.

What the failure of the FTC and the States’ complaint shows is that old conceptions of ‘monopoly’ don’t map accurately onto the monopolistic-like power of some tech giants — Facebook in this instance. So pursuing old-style antitrust actions on the basis of ‘monopoly’ is likely to come unstuck, especially with a judiciary that’s been conditioned by decades of Borkism. What’s needed, therefore, is lots of legislative creativity to develop conceptions of corporate power that are appropriate to the power that these corporations actually wield.

In the case of Facebook, for example, a more promising line of inquiry might be that suggested by my colleague Jennifer Cobbe — and also by Josh Simon and Dipayan Ghosh. This line of argument locates the real monopolistic power of social media companies in the algorithms that determine users’ newsfeeds, i.e. what kinds of information users are presented with. One can think of these algorithms as constituting the critical infrastructure of the public sphere. Or to put it another way: once upon a time, John D. Rockefeller & Co exerted (and abused) their monopoly control over the railroads that other oil-drillers needed to use to get their oil to market. Mark Zuckerberg plays an analogous role today — as the controller of the virtual railroad that conveys ideas and information to individual citizens. The implication is that regulation as infrastructure might be a more appropriate way of asserting democratic control.