Marketplace

The government achieves a breakthrough in its case against Meta

A U.S. district court awarded Federal Trade Commission chief Lina Khan a victory this week. The judge gave the green light to the FTC to pursue its antitrust lawsuit against Meta, Facebook’s parent company.

The lawsuit alleges that the company pursued an illegal “buy-or-bury” scheme to eliminate competitors.

The court dismissed the agency’s original complaint last June, after the judge said the FTC had failed to sufficiently define the social media market and the company’s share of it.

Matt Stoller is research director at the American Economic Liberties Project. He said there had been some significant changes to the complaint this time around. The following is an edited transcript of our conversation.

Matt Stoler: First, they added a lot more market details. And they said, “OK, let’s characterize the market by time. And when you do that, which is the metric Facebook uses for its own investors, Facebook has a massive share of social media — enough to be a monopoly. And the second thing they did is they changed the narrative a bit, and in a significant way. The original story was: “Facebook is awesome, but they did a few things that were anti-competitive.” And the new complaint said: “Facebook is not very good at developing technology. What happened is they just bought off all of their competitors, and that’s why they built an empire. And when you make that statement, when you say, “Oh, they actually weren’t a startup in a garage, they were just predators who bought their dominance,” then the remedy can be much more aggressive. Because people don’t think, “Oh, well, they legitimately built this thing.” It becomes an “Oh, you stole a lot of what you have.”

Kimberly Adams: When you talk about remedies, in this particular case, what might those remedies look like?

Matt Stoller (courtesy Sophia Lin)

Stoler: Well, I think the biggest one would be to split Facebook into its component parts, so make WhatsApp and make Instagram. And then beyond that, you might have behavioral constraints. You know, they’re not allowed to engage in any other mergers and acquisitions. They cannot prevent their competitors from using some of their tools. You might see pecuniary remedies, a monopolization of their damages involved, just saying, “You can’t monopolize anymore.”

Adam: And the judges allowing this case to move forward, what do you think is different this time around?

Stoler: Antitrust cases are difficult and laborious. The courts have weakened the law a great deal. And one of the things that means is that it’s easy to get a case dismissed at the motion to dismiss stage. If you take this step, you can be judged. They went through the motion to dismiss stage, which is very important. That means they’re going to go through discovery, so they’ve already investigated, but they’ll be able to get internal documents, give depositions, and then the company’s top executives will likely have to testify in a trial. And they don’t want to do that. And it’s huge to put a [Chairman and CEO] Mark Zuckerberg at the helm, to put a [Chief Operating Officer] Sheryl Sandberg at the helm.

Adam: What does it mean for other big tech companies that this case was even able to move forward?

Stoler: So it’s a big problem. Lina Khan investigated a bunch of companies. So the fact that she’s not recused on Facebook means she’s not recused on any of the other companies. This means that the FTC is able to bring other cases, at a very basic level. On a broader level, that means judges, I think, who have been really hostile to antitrust law for three or four decades now, are more open to seeing monopolization cases. And public pressure, public arguments, discussion of market power in general is having an impact.

Related Links: More from Kimberly Adams

For a little more history on how we got to where we are in the case, The Washington Post skimmed through it when the judge dismissed the FTC’s case last year.

And Ars Technica has an article with more details on this latest decision in which the judge concluded that the agency had passed the bar by providing strong enough arguments to move forward.

Although, according to Matt Stoller, we will probably wait years before any resolution in this matter.