The Federal Trade Commission (FTC) is cranking the pressure on Facebook Inc (NASDAQ:FB) over accusations of anticompetitive practices with a new complaint in federal court. It follows an original complaint, dismissed by a federal judge in June.
Q2 2021 hedge fund letters, conferences and more
According to CNN, the FTC filed an amended complaint in federal court alleging the company “has monopolized social media and harmed competition.”
Gates Capital Management's ECF Value Funds have a fantastic track record. The funds (full-name Excess Cash Flow Value Funds), which invest in an event-driven equity and credit strategy, have produced a 12.6% annualised return over the past 26 years. The funds added 7.7% overall in the second half of 2022, outperforming the 3.4% return for Read More
The amended complaint was filed two months after Judge James Boasberg of the U.S. District Court for the District of Columbia dismissed the initial complaint, stating that the FTC had not offered enough evidence of Facebook’s monopoly in social media,
The decision stopped the case in its tracks.
Now, the FTC has come back with a complaint that is 50% longer than the initial one, wrapping several of the same arguments about Facebook’s unlawful and anticompetitive purchases of Instagram and WhatsApp.
The new filing tackles the initial gaps by showing “how much time users spend on Facebook’s platform compared to other rivals, as well as the sheer number of daily and monthly users of Facebook services.”
It also offers more examples of the number of firms that Facebook has purchased and closed down over the years, or whose services the company has supposedly turned against its competitors.
A Giant Issue
The lawsuit is seen as one of the biggest challenges ever faced by Mark Zuckerberg’s company. Authorities in the U.S. and Europe are increasing the pressure on big tech companies, to the extent that, should the suit prosper, Facebook could have “to spin off Instagram or WhatsApp.”
The hunt is led by FTC Chair Lina Khan, who has fiercely opposed monopolistic practices by similar companies. She contributed to an extensive congressional report that concluded that Facebook and the other big techs “have abused dominant market positions to preserve their power.”
In response, Facebook called the lawsuit “meritless” and tweeted on Thursday: “We are reviewing the FTC's amended complaint and will have more to say soon.”
"There was no valid claim that Facebook was a monopolist —and that has not changed.”
“Our acquisitions of Instagram and WhatsApp were reviewed and cleared many years ago, and our platform policies were lawful.”
“The FTC’s claims are an effort to rewrite antitrust laws and upend settled expectations of merger review, declaring to the business community that no sale is ever final. We fight to win people's time and attention every day, and we will continue vigorously defending our company.”
Facebook is part of the Entrepreneur Index, which tracks 60 of the largest publicly traded companies managed by their founders or their founders’ families.