The US Federal Trade Commission has hit back at Facebook’s claims that there is no merit to an antitrust suit, saying that there is an addressable social media market — and Facebook dominates the vast majority of it.
Two lawsuits were filed against Facebook in December claiming it was engaged in anti-competitive practices. Facebook has asked the court for dismissal, but the FTC has pushed back with a statement.
“The court should deny Facebook’s motion,” the commission said in a document filed late Wednesday, arguing that “Facebook holds monopoly power over personal social networking (‘PSN’) services in the U.S., and is violating the antitrust laws by maintaining its monopoly through means other than competition on the merits.”
Yahoo Finance reports that the request for dismissal is based on a lack of a market to control. Facebook says its services are free of charge, so no personal social network market exists.
The basis of Facebook’s arguments is that the FTC has no authority to sue based on actions it had previously approved. The acquisitions of Instagram in 2012 and WhatsApp in 2014 were legal and can’t be reversed.
“No court has ever held that such a free goods market exists for antitrust purposes,” Facebook’s motion said, “and the FTC does not allege that one exists here.”
The FTC asserts that Facebook’s market position is protected by formidable barriers to entry. New entrants into the social media space face challenges like user switching cost — the time and effort a user spends building up a profile and history.
There is little chance of the case being dismissed this early in its proceedings. The goal of the FTC is to break up Facebook by removing its larger networks Instagram and WhatsApp.
The two lawsuits were filed by the FTC and a coalition of attorneys general from 46 states. Both lawsuits claim that Facebook engaged in anticompetitive practices to squash the competition and create the dominant platform it is today.
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