Facebook asks court to dismiss the FTC’s antitrust complaint

Note: This was originally published in the daily newsletter at the Columbia Journalism Review, where I’m the chief digital writer

Last fall, after more than a year-and-a-half’s worth of Congressional committee hearings and investigations into the power of technology platforms like Google, Facebook, and Twitter, the government released a comprehensive report on alleged anti-competitive conduct by the companies. The 450-page report, which called for a number of “structural remedies” including breakups of the companies, also helped lend momentum to an almost unprecedented number of state and federal antitrust actions. One of those was a lawsuit launched against Facebook by the Federal Trade Commission, backed by an investigation it and 49 states conducted, alleging a wide range of monopolistic behavior. At the time, the company responded with a blog post and public statement calling the lawsuit “revisionist history,” and arguing that it “ignores reality” when it comes to the nature of its business. On Wednesday, the company released a much more comprehensive response: a 54-page defense and a request to dismiss the suit.

“No government lawsuit similar to this one has been brought in the 130-year history of the Sherman Act, and for good reason,” Facebook’s statement begins. The FTC “has not alleged facts amounting to a plausible antitrust case,” it says; instead, the company alleges the federal regulator has chosen to file a case that “ignores its own prior decisions, controlling precedent, and the limits of its statutory authority.” In order to make a plausible case for antitrust action, Facebook’s defense argues, the FTC would have to prove a) that Facebook dominates a defined market, b) that it has the power in that market to raise prices or restrict output, and c) that it has maintained that monopoly power in ways that harm competition and/or injure consumers. The government’s complaint fails, the company says, “because the FTC has not pleaded facts sufficient to satisfy any of the three required elements of a claim.”

When it comes to the market the company allegedly dominates in an anti-competitive way, the FTC’s case argues that the relevant market is “personal social networking,” i.e. the sharing of photos and other personal information with family and friends. As some technology journalists like newsletter author Casey Newton have pointed out, this is a shaky definition on a number of counts: for one thing, the FTC’s claim carefully ignores popular apps like TikTok, which has managed to build a massive amount of market share — 800 million users or so by the end of last year — despite Facebook’s alleged monopolistic behavior. Such a market definition, the company argues, is contradicted by the FTC’s own allegations, which accuse the social network of restricting access to its data platform in order to keep out competitors, which then aren’t included in the regulator’s definition of Facebook’s market.

Facebook’s defense also goes after another problematic aspect of the FTC’s claim: the fact that antitrust activity — as it has been defined by the courts for the past several decades — consists of harming consumers by restricting choice and/or raising prices. The second of these is difficult to prove on a consumer level because (as Facebook takes pains to point out) its services are free. That leaves the regulator to argue that the price-raising behavior exists on the advertising side, which poses its own challenges, and to try to make the case that Facebook causes the consumer harm in other ways that are just as bad as raising prices or restricting choice — such as by invading their privacy and sharing their data with advertisers. This argument was advanced by legal scholar Dina Srinivasan in 2019 in a legal paper called “The Antitrust Case Against Facebook,” but it has not been tested in federal court.

The government’s case is also complicated by the fact that a substantial amount of the FTC’s claim rests on the idea that the acquisitions of both Instagram and WhatsApp were anti-competitive in nature, and designed to maintain and expand Facebook’s monopoly on social networking. But as Facebook points out in its motion to dismiss, the FTC itself approved both of those acquisitions, and said it had no problem with them from a competitive point of view. Although antitrust experts like Tim Wu — a Columbia Law professor and former advisor to the FTC who was recently named to Joe Biden’s economic advisory council — have said that approving such deals does not in any way restrict the regulator from re-opening them later, doing this means arguing that the FTC either screwed up the first time around, or is trying to rewrite history. How the government plans to get around this and other hurdles remains to be seen.

Here’s more on Facebook:

Destructive: Dipayan Ghosh is a former Facebook staffer and a former policy advisor to the Obama White House who now runs the Digital Platforms and Democracy Project at Harvard, and is also the author of a recent book called Terms of Disservice: How Silicon Valley is Destructive by Design. “I believe that Facebook, Google, and Amazon should be seen as out-and-out monopolists that have harmed the American economy in various ways, and have the potential to do much greater harm should their implicit power go uncurbed,” he writes. CJR spoke with Ghosh and a number of other experts in a series of interviews using our Galley discussion platform.

Insatiable: Karen Hao writes for MIT’s Technology Review about how Facebook’s artificial intelligence algorithms “gave it an insatiable habit for lies and hate speech,” and how the man who helped build them — Joaquin Quiñonero Candela, a former director of the AI group at Facebook — can’t fix the problem because the company essentially won’t let him. “Everything the company does and chooses not to do flows from a single motivation: Zuckerberg’s relentless desire for growth,” she writes. “Quiñonero’s AI expertise supercharged that growth. His team got pigeonholed into targeting AI bias, as I learned in my reporting, because preventing such bias helps the company avoid proposed regulation that might, if passed, hamper that growth.”

Slam dunk: In contrast to some who believe the government’s case against Facebook is on thin ice, Wu has said that he thinks it is a “straightforward and easy case.” In an op-ed published in the New York Times shortly after the FTC filed its claim, he argued that Facebook is clearly guilty of “buying its way out of competition” in the same way that John D. Rockefeller did at Standard Oil. Facebook “joins a tradition of such cases, including the antitrust suits against Standard Oil, American Tobacco, Alcoa, IBM, AT&T and Microsoft,” says Wu. “None of those cases damaged the American economy. On the contrary, the lawsuits were aimed at monopolies that had squashed competition, and they resulted in revitalized, reorganized and ultimately more innovative industries.”

Other notable stories:

The New York Times writes about the fallout from a Reply All podcast series on allegations of racism at Bon Appetit magazine, which wound up leading to the demise of the popular podcast itself, in part because it helped trigger similar accusations aimed at Gimlet Media, the parent company of Reply All. Gimlet is now owned by Spotify, an acquisition which the Times says complicated the union drive at Gimlet and helped lead to allegations of racism. According to the Times, Gimlet co-founder Alex Blumberg, who some blame for the problems, made $20 million from the acquisition.

The Organized Crime and Corruption Reporting Project says it is deeply concerned by what it says is a state-affiliated media campaign aimed at tying one of its editors to a Serbian crime syndicate. According to organization, Serbian pro-government outlets have been trying to connect Stevan Dojčinović — a regional editor with OCCRP and the editor-in-chief of Krik, a Serbian news outlet focusing on crime and corruption — to a Montenegro-based gang called Kavač and one of its leaders, Veljko Belivuk, who has been charged with several murders. “By accusing our colleagues of being part of the Kavač gang’s criminal activities, these pro-state tabloids are providing criminal groups with justification for murder,” said OCCRP Publisher Drew Sullivan.

Brandi Collins-Dexter and Joan Donovan, researchers at Harvard’s Shorenstein Center who focus on disinformation and digital propaganda, write for CJR about how malicious actors including The Proud Boys and other right-wing and/or white supremacist groups used digital techniques such as “keyword squatting” to promote the term “1776” as a counterpart to the New York Times‘ 1619 project, and ultimately made it the rallying cry for the storming of the US Capitol on January 6. Keyword squatting is defined as “the practice of “creating online content…around a specific search-engine-optimized term so as to dominate the search results of that term.”

The Daily Beast writes about the collapse of a new-media venture backed by right-wing YouTube creator Tim Pool, which allegedly degenerated into interpersonal attacks, including a former partner calling the Maryland sheriff’s department in an attempt to get Pool to return her cat, Betsy. “He was trying to use my cat as leverage,” said Emily Molli, Betsy’s owner and a former Pool business partner. According to the Daily Beast, Pool said he never had custody of the cat, “whose return to Molli was eventually arranged through an animal shelter and a Maryland sheriff’s lieutenant.”

Facebook’s recommendation algorithm shows different news, groups, and hashtags to different users. But who sees what? A new feature from data-journalism startup The Markup called “Split Screen” tries to answer that question by offering users a look at what Biden voters and Trump voters see when they look at their news feeds on the social platform. The views are based on real-world data from users who have agreed to give The Markup access to their Facebook feeds via the startup’s Citizen Browser project. Split Screen shows which news articles and other content were shown to different voters and how often over a certain period of time.

BuzzFeed is considering going public through a merger with the special-purpose acquisition company 890 Fifth Avenue Partners, Bloomberg reported Wednesday. The terms of the deal aren’t publicly known, and talks are ongoing and can still fall apart, according to Bloomberg. BuzzFeed, founded in 2006 by several early employees of The Huffington Post, completed the acquisition of that site — now known as HuffPost — last month, before laying off 47 staffers earlier this week. Special-purpose acquisition companies or SPACs are vehicles that have no assets and are used by companies as a shortcut to doing a public share offering.

YouTube says it has taken down more than 30,000 videos that made misleading or false claims about COVID-19 vaccines over the last six months, the first public release of numbers related to that kind of content, Axios reports. Since February 2020, YouTube has taken down more than 800,000 videos containing coronavirus misinformation, the company says. The videos are first flagged by either the company’s AI systems or human reviewers, then receive another level of review. But so far, the Google video subsidiary hasn’t said anything about the reach of the videos it has removed.

NPR has published a new video project called The Early Days Of The Pandemic As Seen Through Your Camera Roll, which the public-radio outlet says revisits this time last year when Americans “realized the pandemic was getting serious.” NPR said it did a public callout for memories and images, and got nearly 2,000 responses, thousands of images, nearly 100 voicemails and a dozen video interviews. “What emerged is a moving depiction of our collective grief and resilience,” the outlet says.

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