By Jerri-Lynn Scofield, a former securities attorney and derivatives trader.She is currently writing a book about textile artisans.

Judge James Bosberg of the District Court for the District of Columbia yesterday denied Facebook’s motion to dismiss the Federal Trade Commission (FTC) lawsuit for failing to file a claim.

In June last year, a judge granted a Facebook motion, The FTC’s original complaint was dismissed without prejudice to the appeal. The judge, an Obama-appointed judge, invited the FTC to amend the original complaint, and it has now done the job to his satisfaction.

from memorandum comments:

Second time lucky? The FTC’s first antitrust lawsuit against Facebook, Inc. was unsuccessful, as the court dismissed the complaint last June. In doing so, the court concluded that the Commission failed to reasonably claim that “Facebook has a monopoly in the market for personal social networking (PSN) services.” FTC v. Facebook, Inc., 2021 WL 2643627, at *1–2 (DDC June 28, 2021). However, the court left the door ajar for the agency to amend the complaint and resume its proceedings because “it is conceivable that the deficiencies could be overcome by re-complaining.” ID. at 1.

The FTC eagerly accepted such an invitation, filing an amended pleading containing significant additions and amendments designed to address the deficiencies identified in the court’s previous opinion. The core theory of litigation remains largely unchanged. The Commission goes on to claim that Facebook has long had a monopoly on the market for PSN services and has illegally maintained that monopoly through two actions: First, by acquiring competitors and potential competitors — notably Instagram and WhatsApp — believing that it is well-positioned to cannibalize its A monopoly; second, by implementing and enforcing policies that prevent interoperability between Facebook and other apps it sees as a nascent threat. This time, however, the facts used to reinforce these theories are more forceful and detailed than before, especially with regard to the defendants’ alleged monopoly contours.

Still, Facebook objected again, calling the FTC’s latest effort akin to rearranging the recliners on the Titanic. While the agency is likely to face an uphill task in proving its allegations, the court believes that it has now cleared the plea hurdle and may proceed with the discovery. This hold stems from several conclusions. First, the FTC has now charged enough facts to reasonably establish that Facebook exercises monopoly power in the marketplace for PSN services. Second, it fully claims that the company’s dominant market share is protected by barriers to entry into that market. Third, the agency also explained that Facebook not only has monopoly power, but it also knowingly maintains that power through anticompetitive behavior — notably its acquisitions of Instagram and WhatsApp. However, the court will not allow the allegations surrounding Facebook’s interoperability policies (also known as platform policies) to move forward; the underlying reasons for their creation are the same as previously explained: Facebook abandoned those policies in 2018, and the last time it allegedly The implementation is more in the past.

key takeaways

There’s a lot to unpack here. I only focus on three points.

First, as acknowledged by The New York Times and others, the opinion clears the way for the FTC to pursue an aggressive Big Tech regulatory agenda;[s] The agency has scored a major victory in its quest to reduce the power of the biggest tech companies,” according to Judge says Facebook’s antitrust lawsuit can move forward, win for FTC

The Biden administration’s antitrust agenda is very different from its recent predecessors. The last federal antitrust lawsuit of similar scope and ambition could be the Clinton administration’s lawsuit against Microsoft.

Central to the pursuit of Biden’s antitrust agenda is the participation of FTC Chair Lina Khan, who distinguished herself from previous academic work dissecting the anticompetitive behavior of Big Tech (see Biden names Lena Khan as FTC chair; and Amazon’s arrogance backfires, trying to discredit incoming FTC chair Lina Khan needs to shy away because she knows them too well).

Second, as Judge Bosberg acknowledged, the FTC’s road to victory in this lawsuit is tough. Now, however, thanks to his ruling, the agency will be able to search Facebook’s documents in the discovery. Only then will it be possible to determine how strong the FTC’s antitrust case is.

Third, a third judge, Boasberg, sneered at Facebook’s attempt to use Khan’s so-called “prejudgment of Facebook’s antitrust liability” as an excuse:

In the end, the company flies a new arrow this time, urging the vote to dismiss the FTC-authorized amended complaint on an independent basis is invalid because Chair Lina Khan’s alleged prejudgment of Facebook’s antitrust liability requires her to recuse herself. The court held that the argument fell short of its goal because Khan acted in a prosecuting capacity, not a judicial capacity, in the voting-related circumstances.

Let the game begin!