Facebook Asks Court to Toss U.S. Lawsuit Seeking Breakup
(Bloomberg) -- Facebook Inc. asked a federal judge to throw out a U.S. antitrust case against the social-media company, saying the government is attempting a “do-over” by trying to unwind acquisitions that won regulatory approval years ago.
In a court filing Wednesday in Washington, Facebook said the December lawsuit by the Federal Trade Commission ignores that the agency approved the company’s acquisitions of Instagram in 2012 and WhatsApp in 2014 and fails to explain why it now wants to undo them. The filing is Facebook’s first formal response to the FTC complaint and marks the start of a high-stakes battle over the future of the company. A similar suit has been filed by a group of states.
“The FTC wants a do-over,” said Facebook, which rejected government claims that the company operates like a monopoly. “It just ignores its own decisions, failing to offer any valid explanation for its about-face.”
The company is fighting to hold onto Instagram and WhatsApp and to defeat the government’s attempt to force a breakup. A Facebook win at this stage in the legal fight would allow the social media giant to escape unscathed without a trial. The company said the government’s case is unprecedented. No court has ever held that the FTC can unwind a merger years after the agency investigated the transaction absent a showing that the past review was somehow compromised.
The antitrust lawsuits also ignore the growing competition from social media platforms including ByteDance Ltd.’s TikTok, Twitter Inc. and Snap Inc., a Facebook spokesperson said in a statement. Since the government first cleared the Instagram and WhatsApp mergers, “this competition has only gotten more fierce, and consumers have benefited enormously from Facebook’s investments in these free apps,” the spokesperson said.
An FTC spokesperson declined to comment on the company’s filing.
The FTC and a group of states say Facebook’s Instagram and WhatsApp takeovers violated antitrust laws because they were intended to squash emerging competition that threatened to undermine the company’s monopoly power. The FTC investigated and approved both deals, but last year, by a 3-2 vote of its appointed commissioners, the agency decided to file its antitrust complaint.
“By a one-vote margin, in the fraught environment of relentless criticism of Facebook for matters entirely unrelated to antitrust concerns, the agency decided to bring a case against Facebook that ignores its own prior decisions, controlling precedent, and the limits of its statutory authority,” the company said.
New York Attorney General Letitia James, who is leading the case filed by states, defended efforts to curb the company’s reach.
“Facebook is wrong on the law and wrong on our complaint,” James said in a statement. “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. We will continue to stand up for the millions of consumers and many small businesses that have been harmed by Facebook’s unlawful behavior.”
The Facebook complaints were filed on the heels of the Justice Department’s October antitrust lawsuit against Alphabet Inc.’s Google, which is accused of abusing its monopoly power in internet search. Together, the lawsuits represent the most significant monopoly cases in the U.S. since the Justice Department’s 1998 lawsuit against Microsoft Corp.
Critics of Facebook say the takeovers of Instagram and WhatsApp should never have been approved. In July, during testimony by Facebook Chief Executive Officer Mark Zuckerberg and other tech CEOs before the House Judiciary Committee, Representative Jerrold Nadler, a New York Democrat, said he thought Zuckerberg bought Instagram to “neutralize” a rival.
“Facebook saw Instagram as a threat that could potentially siphon business away from Facebook,” Nadler said. “And so rather than compete with it, Facebook bought it. This is exactly the type of anti-competitive acquisition that the antitrust laws were designed to prevent.”
In its filing, Facebook called the government’s attack on the Instagram and WhatsApp acquisitions “extraordinary” because the company complied with the law for alerting the agency and waited for a formal review before closing the deals.
Facebook has long argued its acquisition of Instagram was good for consumers because its investments improved the photo-sharing app and helped make it successful.
“The FTC posits that an independent Instagram could have done even better and brought more benefits to consumers on its own, but the FTC alleges no facts to support that claim,” the company said in the filing.
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