U.S. States Ask Appeals Court to Reinstate Meta Lawsuit

What’s the story?

• 46 U.S. states, D.C., and Guam asked a federal court to reinstate a 2020 antitrust lawsuit against Meta Platforms, Inc., owner of Facebook, after a lower court said the plaintiffs waited too long to sue.
• The states want to challenge Meta’s acquisition of Instagram and WhatsApp, alleging that Meta used its monopoly power to buy potential competitors and curtail competitive behavior. New York Solicitor General Barbara Underwood stood before a three-judge panel at the U.S. Court of Appeals for the D.C. Circuit on Monday and said: 

“As a result, it has stifled competition and denied consumers the improvements in service and other benefits that competition provides. The states bring this action to protect the public from continuing harm caused by this conduct.”

• Facebook successfully had the 2020 case thrown out because its purchase of the two platforms took place years prior and did not cause antitrust concern at the time. Underwood argued that the dismissal of the case by the lower court was wrong, specifically in its decision to throw out the case without discovery under the legal doctrine of “laches,” indicating that the states had waited too long to take action. Underwood countered that argument by adding:

“There was no harm to Facebook from the states filing their complaint in 2020 instead of a few years earlier.”

Facebook’s actions

• Facebook bought Instagram in 2012 for $1 billion and WhatsApp in 2014 for $19 billion. 
• Meta’s team stood firm arguing that the states should have acted earlier on the purchases since they were “highly publicized” and that laches prevents the lawsuit from moving forward. 
• Meta attorney Aaron Panner argued:

“The transactions took place in 2012 and 2014 and all of this conduct was, of course, quite open and publicized at the time…And yet we see a suit that’s filed at the end of 2020. The doctrine of laches exists to prevent that kind of unfair delay.”

The original lawsuit 

• In Dec. 2020, the Federal Trade Commission (FTC) sued Facebook for illegally maintaining a social network monopoly. In cooperation with the attorney generals of the 46 states, D.C., and Guam, the FTC conducted an investigation that concluded that Facebook engaged in a systematic strategy to eliminate threats to its monopoly — including its purchase of Instagram and WhatsApp. 
• The FTC’s complaint argued that Facebook dominates the world’s personal social networking services with illegal monopoly power in the market, leading to an unmatched position with staggering profits. 
• The FTC stated that this course of conduct harms ordinary and expected competition, leaves consumers with few choices for personal social networking, and denies advertisers the benefit of competition. 
• The FTC sought a permanent injunction that could require Facebook to remove investment in assets (including Instagram and WhatsApp), prohibit Facebook from creating conditions on software developers that discourage competition and require the company to give notice and seek approval for future mergers and acquisitions. 
• Ian Conner, Director of the FTC’s Bureau of Competition, stated: 

“Personal social networking is central to the lives of millions of Americans…Our aim is to roll back Facebook’s anticompetitive conduct and restore competition so that innovating and free competition can thrive.” 

Do you support the lawsuit filed against Meta?

-Jamie Epstein

(Photo credit: iStock/Kira-Yan)