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Facebook Files to Dismiss Antitrust Lawsuits, Claiming Its Acquisitions Have Been ‘Good’ for Users, Advertisers and Competition

Facebook DOJ Lawsuit Discrimination
AP

Facebook, the world’s biggest social media company, filed motions Wednesday to dismiss antitrust lawsuits brought by the Federal Trade Commission and state attorneys general — claiming that, contrary to the government allegations, its megadeals for Instagram and WhatsApp have benefited consumers and boosted competition.

In coordinated suits filed last December, the FTC and more than 40 state AGs said Facebook acquired Instagram and WhatsApp in violation of U.S. antitrust laws. The suits charged that the company’s unlawful monopoly has let it dictate how users’ private information is collected and monetized and that Facebook has imposed anticompetitive conditions on third-party developers.

Facebook, in a statement after filing the motions, argued that its acquisitions “have been good for competition, good for advertisers and good for people.”

“Our products remain popular because we constantly evolve, innovate and invest in better experiences for people against world-class competitors,” the company said. As it has previously, Facebook noted that the FTC cleared the Instagram and WhatsApp deal years ago. “We believe the government should be denied the do-over it seeks,” the company said.

Facebook claimed the FTC’s antitrust lawsuit was unprecedented in the 130-year history of the Sherman Act because it does not “credibly claim that our conduct harmed” competitors or consumers. “The FTC’s case against Facebook ignores the reality of the dynamic, intensely competitive high-tech industry in which Facebook operates,” the company said.

Facebook also faulted the FTC’s “personal social networking” definition of the market in which the company is alleged to hold a monopoly as “nonsensical.” That verbiage is “no more than a description of part of what Facebook provides,” the company said in its filing, and “the allegations do not provide a basis for determining which of the many products vying for user time and attention are in or out of the supposed market.”

For example, the FTC’s lawsuit says “personal social networking” is distinct from video services like YouTube, Netflix and Hulu — but if “passive consumption” of video is in the market to the extent Facebook offers that feature, “the FTC does not and cannot allege that other online services offering supposedly passive consumption of video… do not offer adequate substitutes for consuming video on Facebook,” the company said in its filing.

Regarding the state AGs’ complaint, Facebook asserted that lawsuit “does not and cannot assert that their citizens paid higher prices, that output was reduced, or that any objective measure of quality declined as a result of Facebook’s challenged actions.” The lawsuits, according to Facebook, are based on “public policy concerns” like digital privacy that are outside the purview of antitrust law.

In response to Facebook’s motions to dismiss the suits, New York Attorney General Letitia James, who led the effort by the AGs to sue Facebook, said, “Facebook is wrong on the law and wrong on our complaint. We are confident in our case, which is why almost every state in this nation has joined our bipartisan lawsuit to end Facebook’s illegal conduct.”

According to the state AGs’ suit, Facebook CEO Mark Zuckerberg saw Instagram as a direct threat soon after the photo-sharing startup launched in 2010. In April 2012, Facebook acquired Instagram for $1 billion, “despite the company not having a single cent of revenue and valuing itself at only $500 million,” New York AG James said when the suit was filed. Separately, Facebook in 2014 acquired mobile messaging app WhatsApp in a deal worth $19 billion, which was “wildly more than the extravagant price Zuckerberg had recommended paying a few months earlier and the $100 million another competitor offered to buy the company two years earlier,” according to James.

Among other things, the FTC lawsuit against Facebook seeks a ruling to force the company to divest or restructure Instagram and WhatsApp. Industry analysts believe it’s unlikely the antitrust litigation will succeed in breaking up the massive company.