Today we filed motions to dismiss the antitrust lawsuits brought by the Federal Trade Commission and state attorneys general. Antitrust laws are intended to promote competition and protect consumers. These complaints do not credibly claim that our conduct harmed either. Relying on a market definition that doesn’t make sense, these cases attempt a do-over — challenging acquisitions cleared by the FTC years ago, after enormous investment by Facebook to make them into the apps people enjoy today. The government ignores the realities of the fierce competition we face every day and sends a dangerous message that no sale is ever final. As we said when the FTC and the state attorneys general announced these lawsuits, people around the world use our products not because they have to, but because we make their lives better. Public policy challenges in areas like harmful content, election security and protecting people’s privacy should be addressed through updated regulations — not through misguided antitrust claims.
Below we provide a brief overview of the arguments in our motions.
Our Motion to Dismiss the FTC’s Lawsuit
No government lawsuit similar to this one has been brought in the 130-year history of the Sherman Act, and for good reason: The FTC has not alleged facts amounting to a plausible antitrust case. The FTC’s case against Facebook ignores the reality of the dynamic, intensely competitive high-tech industry in which Facebook operates.
- The FTC has not alleged a plausible relevant antitrust market. It is the FTC’s burden to allege facts establishing a market that includes all products that consumers consider acceptable substitutes. Virtually ignoring the relentlessly competitive business that provides Facebook with substantially all of its revenues (advertising), the FTC purports instead to define a free “personal social networking” user market with only the vaguest of limits and without reference to what consumers consider acceptable substitutes. The FTC does not allege any facts that would permit the court to discern which products (or even which features of Facebook) are in the alleged market and which are not.
- The FTC has not plausibly alleged monopoly power. The FTC also fails to plausibly allege that Facebook has monopoly power (e.g., the power to increase prices or restrict output without losing market share). The FTC cannot establish that Facebook has increased prices or restricted output because the agency acknowledges that Facebook’s products are offered for free and in unlimited quantities. The FTC’s complaint contains a single bare, conclusory allegation that Facebook has a market share “in excess of 60%,” which must be disregarded because it is not supported by any facts.
- The FTC has not plausibly alleged unlawful exclusionary conduct.
- The FTC does not plausibly allege that Facebook’s acquisitions of Instagram and WhatsApp were anticompetitive. The FTC reviewed both acquisitions before consummation and decided to allow them to close.
- The FTC’s claim that Facebook was required to share its proprietary platform with rivals is precluded by controlling Supreme Court precedent.
- Moreover, none of the challenged conduct is plausibly alleged to have harmed competition and consumers.
- The FTC lacks statutory authority to maintain this suit. Section 13(b) of the Federal Trade Commission Act, the sole claimed source of the FTC’s authority here, authorizes the FTC to proceed in federal district court only to stop ongoing or imminent violations of law. It does not authorize actions to remedy past conduct, which is all the FTC challenges here.
Our Motion to Dismiss the State AGs’ Lawsuit
The complaint filed by the state attorneys general fails on multiple grounds. It does not and cannot assert that their citizens paid higher prices, that output was reduced, or that any objective measure of quality declined as a result of Facebook’s challenged actions. Instead, the states, even more explicitly than the FTC, ground their lawsuit in public policy concerns — digital privacy, for example — that are not antitrust law concerns. And, like the FTC, the states focus their attacks on what Facebook did long ago. Their afterthought claims are brought by the wrong parties, are untimely, and are empty as a matter of antitrust law.
- The states lack standing to bring this case. The states sue not as federal law enforcers or for injuries suffered by the states themselves but as “parens patriae” on behalf of their citizens. But the states fail to allege the required interest (like preventing a general harm to their states’ economies) to give them standing to sue in that capacity.
- The states’ claims based on Facebook’s acquisitions are barred by the doctrine of laches, or unfair delay. The states waited far too long to act — far longer than the four years that is the outer limit of the yardstick for laches when states and private parties sue under federal antitrust laws. Facebook would be unfairly prejudiced if the case were allowed to proceed.
- The states fail to state a plausible claim that Facebook’s acquisitions violated the Clayton Act.
- The states have alleged only that Instagram and WhatsApp were potential competitors and have only speculated that these potential rivals could have brought more benefits to competition and consumers if they had not been acquired by Facebook.
- No court has adopted the theory the states seek to enshrine in law for the first time. The states’ claims fail to allege that, at the time of the acquisitions, it was likely that either Instagram or WhatsApp was poised to enter the claimed relevant product market, and provide even less basis for the entirely implausible claim that they were the only potential entrants capable of bringing the benefits of competition to consumers.
- The states’ Section 2 claim tracks the FTC’s parallel claim, and their complaint likewise fails to plead the elements of that claim. The states provide additional atmospherics but rely almost entirely on the same three lawful actions challenged by the FTC; they allege no facts establishing a plausible claim that Facebook engaged in unlawful exclusionary conduct that harmed competition and ultimately consumers.
Our acquisitions have been good for competition, good for advertisers and good for people. Our products remain popular because we constantly evolve, innovate and invest in better experiences for people against world-class competitors. We believe the government should be denied the do-over it seeks.
Learn more about how we’re building to compete.
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