Facebook's Climb to $1 Trillion Needs an Asterisk


Facebook Inc. investors celebrated the social media giant’s court victory on Monday in two major antitrust lawsuits by driving the company’s market value above $1 trillion for the first time. But a closer look at the judge’s decision reveals it may just delay the eventual reckoning. It is not an “all-clear” ruling.

U.S. District Judge James Boasberg granted Facebook’s request to dismiss the suits filed last December by the Federal Trade Commission and a group of state attorneys general, which accuse the company of violating antitrust laws and leveraging its power in the social media market to stifle innovation and squash emerging competitors. The FTC requested court action to unwind Facebook’s prior acquisitions, including Instagram and WhatsApp, and restrict any future anticompetitive behavior. In Monday’s opinion, Boasberg said the government failed to provide the necessary facts or evidence to back up its claim that Facebook had a  more than 60% monopoly share of the social networking market. Boasberg left it open for the regulators to refile an amended case within 30 days.

This seems more like a technicality than a true dismissal of the complaints. It’s highly likely that the FTC will refile its lawsuit with the required data and evidence. Given that Facebook’s services reach nearly 3 billion users each month, it shouldn’t be difficult for the agency to come up with the required backup. And with antitrust scholar Lina Khan now leading the FTC, it’s also likely any renewed legal action will be formidable.   

Notably, the government’s main claim that Facebook’s “buy-or-bury” strategy, specifically its purchases of Instagram and WhatsApp, stifled emerging competitive threats was not criticized. The FTC “is on firmer ground in scrutinizing the acquisitions of Instagram and WhatsApp, as the Court rejects Facebook’s argument that the FTC lacks authority to seek injunctive relief against those purchases,” the judge wrote.

At the end of the day, this will likely be just a delay of a few weeks in the government’s case against Facebook. The remedies the FTC asks for - including a possible breakup of the social media giant — are still on the table.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Tae Kim is a Bloomberg Opinion columnist covering technology. He previously covered technology for Barron's, following an earlier career as an equity analyst.

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