A federal court on Monday dismissed the Federal Trade Commission’s antitrust lawsuit against Facebook Inc. FB, -1.05% that would have split up the social-networking giant, as well as a similar suit from 48 state attorneys general.
The surprise decision is a potentially crippling blow to Washington regulators who are attempting to tamp down the power and influence of Big Tech. Apple Inc. AAPL, +1.15%, Amazon.com Inc. AMZN, +0.12%, and Google parent Alphabet Inc. GOOG, -0.63% GOOGL, -0.22% are also in the cross-hairs of the FTC or Justice Department.
Facebook shares climbed 4% in Monday trading, closing with a market cap above $1 trillion for the first time.
The rulings does not signal the end of the legal road for the FTC, however. The court acknowledged the agency could file an amended complaint within the next 30 days and continue litigation.
An FTC spokesman told MarketWatch the commission “is closely reviewing the opinion and assessing the best option forward.”
Both the FTC and state AG suits challenged Facebook’s acquisitions of Instagram and WhatsApp in 2012 and 2014, respectively, which the FTC approved.
“We are pleased that today’s decisions recognize the defects in the government complaints filed against Facebook,” a Facebook spokesman told MarketWatch. “We compete fairly every day to earn people’s time and attention and will continue to deliver great products for the people and businesses that use our services.”
The federal court, however, ruled the FTC failed to prove that Facebook commands monopoly power in the domestic social-networking market.
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“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 U.S. District Court for the District of Columbia ruled. “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 is undoubtedly light on specific factual allegations regarding consumer-switching preferences,” the court wrote. “These allegations — which do not even provide an estimated actual figure or range for Facebook’s market share at any point over the past ten years — ultimately fall short of plausibly establishing that Facebook holds market power.”
Federal lawmakers instrumental in antitrust legislation, including six bills marked up last week, immediately issued a statement.
“This decision underscores the dire need to modernize our antitrust laws to address anticompetitive mergers and abusive conduct in the digital economy,” House Judiciary Committee Chairman Jerrold Nadler, D-N.Y., and Antitrust Subcommittee Chairman David Cicilline, D-R.I., said in a joint statement. “As the FTC and 48 State Attorneys General have alleged, Facebook is a monopolist, and it has abused its monopoly power to buy or bury its competitive threats… In the weeks ahead, we will work to advance this legislation to restore choice, innovation, and opportunity for American businesses and consumers.”