The ruling goes to show how important defining the scope of digital markets will be in any attempt to draw up new rules
The first proper attempt to break up Big Tech: In December last year, the Federal Trade Commission filed two antitrust lawsuits against Facebook alongside 48 state attorneys general. Both alleged that Facebook engaged in predatory acquisitions of potential competitors – having used its dominance and monopoly power “to crush smaller rivals and snuff out competition”. The lawsuits requested the divestiture of assets such as WhatsApp and Instagram, and an obligation for Facebook to seek prior approval for future acquisitions. The FTC’s initiative marked the first time that antitrust authorities were openly calling for the break up of Big Tech. If successful, they would have resulted in the undoing of mergers that were authorised in 2011 and 2014, which would be incredibly challenging to do.
The FTC failed to demonstrate that Facebook is a monopoly: On Monday, a federal court in DC dealt a significant blow to the FTC’s attempt to break up Facebook. The judge noted that the scope of the market for social networking services is “hardly crystal clear”, and that the FTC was unable to offer any indication of the methods it used to calculate Facebook’s market share. Such a failure invalidated the FTC’s assertion that Facebook holds a 60%+ share in that market, which the judge found too speculative to proceed. However, the judge only dismissed the complaint, not the case, thereby leaving the door open for the FTC to file a new complaint that addressed his concern.
Facebook may have won the battle, but not yet the war: Following the ruling, Facebook’s market value went past $1tn for the first time. However, it’s by no means in the clear. Bipartisan support for antitrust reform has been gaining momentum over the last few months, and its most vocal advocates have seen the ruling as proof that new laws are needed. Last week, the House Judiciary Committee adopted a comprehensive package of antitrust reforms, which would significantly limit Big Tech’s ability to acquire potential future competitors in the future. The legislation would make the US antitrust framework even more prescriptive than the one currently under discussion in the EU. At the same time, this ruling showed how difficult it can be to scope digital markets – something of which regulators everywhere will have to be mindful if they are to intervene in a targeted and proportionate way.
Source: https://ecf.dcd.uscourts.gov/cgi-bin/show_public_doc?2020cv3590-73
