FTC Refiles Facebook Antitrust Lawsuit, Stock Yawns

Two months after Facebook spiked higher, surpassing $1 trillion in market cap for the first time when a district Judge dismissed the FTC’s antitrust case against the social network, moments ago Facebook dipped – modestly – following reports that the FTC had refiled its antitrust case against Facebook as it seeks to salvage what was once seen as a landmark case before it turned into humiliation.

The agency is trying to revive the case after U.S. District Judge James Boasberg in June dismissed it at the end of June, saying the agency failed to provide enough detail to support its claim that Facebook has a monopoly in the social-media market. Boasberg had given the FTC 30 days to fix the error and refile, and the commission won an extension until Aug. 19.

According to Bloomberg, the Federal Trade Commission filed the new complaint in federal court in Washington, alleging again that Facebook violated antitrust laws by buying Instagram and WhatsApp in order to eliminate them as competitors.

The Facebook case, first filed in December, presents an early test for FTC Chair Lina Khan, who was named head of the agency in June by President Joe Biden. Khan is a leading advocate for taking a more forceful antitrust stance against companies and is already taking steps to bolster the agency’s authority. Facebook, however, has been seeking to bar Khan from participating in the case, arguing that her academic writing about the company and her work on the House antitrust panel, which investigated Facebook and other tech platforms, showed she is biased.

The lawsuit is part of a broad effort by lawmakers and competition enforcers to rein in the power of the biggest U.S. tech companies. Besides the Facebook case, the Justice Department and state attorneys general across the country have multiple lawsuits pending against Google, while Democrats and Republicans on Capitol Hill are pushing forward with a raft of bills that would impose new restrictions on how the companies do business.

Supporters of the Facebook lawsuit said Boasberg’s decision illustrated the legal barriers the government faces in bringing monopoly cases. Advocates for reform say court decisions over decades have effectively allowed dominant companies to engage in anticompetitive tactics and that Congress must give enforcers new authority.

Boasberg not only threw out the FTC’s case. He also dismissed a parallel case by state attorneys general led by New York, without giving them an opportunity to try again. The judge said the states waited too long to challenge Facebook’s acquisitions. Facebook bought Instagram in 2012 and WhatsApp in 2014. The legal doctrine that applied to the states doesn’t apply to the FTC.

And judging by the tiny drop in FB stock, the market is giving this particular lawsuit as much chance of success as the prior one.