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Facebook says the FTC's claims that it's a monopoly are mere 'speculation'

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In a new federal court filing, Meta Platform’s (FB) Facebook is holding fast on its position that its social media company is no monopolist. For that reason, the company argues, the U.S. Federal Trade Commission shouldn’t be allowed to go forward with an antitrust lawsuit against it.

“[R]ather than plead facts that could show monopoly power, [FTC] relies on inapposite statistics and admitted assumptions to dress up conclusory speculation,” Facebook said in its reply brief filed Wednesday in support of its position that the agency failed to craft a viable lawsuit.

The FTC's lawsuit accuses Facebook of engaging in an illegal "buy or bury" scheme by snapping up competitors like Instagram and WhatsApp in order to eliminate its competition.

At the heart of Facebook's argument for dismissing the case is its assertion that the company lacks dominant market share in the markets alleged by the FTC: "personal social networking" or "personal social networking services (PSNS).” The company also said the FTC failed to show Facebook used acquisitions of Instagram and WhatsApp to exclude competitors and harm consumers, and that the FTC’s vote to authorize an amended complaint after an initial one was thrown out was invalid.

“The FTC still has not identified a single commercial actor, anywhere, that recognizes a PSNS market as defined, much less tracks PSNS usage in a way that might permit assessment of market shares,” the filing states. Additionally, the company goes on to say, “no plausible factual support exists” for the agency’s claim that it has power to raise prices or restrict output in the purported market.

Mark Zuckerberg announcing the new name of the company and Meta logo are seen during Facebook Connect livestream displayed on a laptop screen in this illustration photo taken in Krakow, Poland on October 28, 2021. Mark Zuckerberg announced during Facebook Connect event that the new name of Facebook company will be Meta (Photo by Jakub Porzycki/NurPhoto via Getty Images)
Mark Zuckerberg announcing the new name of the company and Meta logo are seen during Facebook Connect livestream. (Photo by Jakub Porzycki/NurPhoto via Getty Images)

Judge James E. Boasberg, a federal judge in Washington, D.C., tossed the FTC's initial complaint in June after concluding the agency fell short of defining Facebook as a monopolist; however, the judge allowed the agency to file an amended lawsuit.

In its revised claims, the FTC argues that the social media giant stands in a special class of social networking services, apart from the likes of TikTok and Twitter. Those other services do not compete directly with Facebook, the FTC argues. It also points to Comscore data that tracks the overall time users spend online as a way to support that Facebook holds a monopoly in the Personal Social Networking Services market.

However, Facebook responded: “The Comscore data do not even purport to measure PSNS and thus do not qualify as ‘underlying facts that might substantiate’ the FTC’s assertion."

According to the FTC, Facebook used its acquisitions of WhatsApp and Instagram, which the agency’s own regulators approved, to block competition that in turn, harmed consumers. The company purchased Instagram in 2012 for $1 billion and WhatsApp in 2014 for $19 billion.

“Unable to maintain its monopoly by fairly competing, the company’s executives addressed the existential threat by buying up new innovators that were succeeding where Facebook failed,” the agency said in its amended complaint. 

In response, Facebook doubled down on its position that because its services are free, the FTC fell short of showing that the services would be less expensive with more competition, or that output would have been greater, but for the alleged illegal monopolistic behavior.

Facebook also raised concerns that FTC Chair Lina Khan should have been recused from voting on the agency’s decision to authorize the amended complaint. It characterized the 3-2 vote as “tainted” and “invalid.”

Alexis Keenan is a legal reporter for Yahoo Finance. Follow Alexis on Twitter @alexiskweed.

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