Facebook’s market capitalization hit $ 1 trillion for the first time on Tuesday morning. The reason for the growth of quotations was the decision of the American Antitrust Court, which at the very first stage of the investigation of the case rejected the claim of 48 American states and the Federal Trade Commission (FTC) against the company.
The Federal Antitrust Court for the District of Columbia sided with Facebook in a dispute with national and state authorities. He granted (.pdf) a motion by the company to dismiss a claim by the 48 states and the FTC, which accused Mark Zuckerberg’s corporation of creating a monopoly, including through numerous purchases of potential competitors.
Immediately after the announcement of the decision, the company’s shares rose in value by more than 4%, and its market capitalization reached $ 1 trillion – for the first time in the history of Facebook.
The US authorities filed a lawsuit against the corporation in December 2020. The plaintiffs were primarily unhappy with Facebook’s purchase of the social networks WhatsApp and Instagram. The messenger was acquired by the corporation in 2014 for $ 19 billion, and the photo-sharing service – in 2012 for $ 1 billion. These purchases were described as examples of Facebook’s predatory behavior in the report “Investigating Competition in Digital Markets” presented to Congress in October last year and became the basis for a lawsuit. The report noted that Facebook is actively competing in the marketplace between its own products (Instagram, WhatsApp and Messenger).
At the same time, the report notes that the top managers of Facebook themselves described their acquisition strategy as “land grabbing” to “strengthen positions”, and the head of the company, Mark Zuckerberg, once said that “he can just buy any competitive startup.”
The authorities see the main solution to the current situation in the market as splitting Facebook and other IT giants into independent companies. However, the presiding judge, James Bousberg, dismissed the authorities’ claim even before the pre-trial proceedings began. He considered that the plaintiffs did not provide sufficient evidence that Facebook monopolized the market for personal services on social media, as described in the statement of the Federal Trade Commission.
The commission, according to Mr. Bousberg, only claims that Facebook has a market share of more than 60% and that there is no other social network of comparable size in the United States. However, “these statements, which do not even give an approximate actual figure or range of Facebook’s market share at any point in the past ten years, ultimately do not provide sufficient credibility to claim that Facebook is in control of the market,” he said.
According to him, there is nothing illegal in this practice itself. The Commission could have expressed dissatisfaction with the way Facebook is implementing its policy regarding such applications, but there were no such claims in the statement of claim.
Facebook, of course, was pleased with today’s court ruling: “Today’s decisions recognize flaws in the government’s complaints against Facebook. We compete fairly every day to get people to give us their time and attention, and will continue to provide great products for the people and businesses that use our services. ”
However, it’s too early to celebrate Facebook’s victory.
“It complicates and delays a case that promised to be difficult already,” said former FTC chief William Kovacic. But the judge gave the plaintiffs 30 days to amend their application and submit an updated version to the court. Representatives of both the FTC and the states have already said that they are studying the court’s decision and possible options for their actions.
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In addition, the American authorities have already prepared a number of bills without this trial, which should significantly complicate the life of both Facebook and other major players. Recently, the Congress has already approved preliminary versions of several bills at once aimed at limiting the dominant position in the market of leading technology companies.
Thus, the bill called ACCESS Act (Augmenting Compatibility and Competition by Enabling Service Switching – “The law on increasing the level of compatibility and competition by changing providers”), among other things, involves the requirement to ensure “interchangeability of platforms in order to make it easier for users to switch from one service to another, including the transfer of relevant user data. ”
Another bill, called the Ending Platform Monopolies Act, expands the powers of regulators. Thus, the Federal Trade Commission is proposed to give the right to file lawsuits against companies with the aim of their forced separation or separation of part of the operations, especially against companies that offer their goods or services on platforms that they also operate.
And despite the fact that these bills do not mention specific companies, American observers are confident that the main target will be the big four high-tech corporations – Google, Apple, Amazon and Facebook. University of Pennsylvania law professor Herbert Hovenkamp believes today’s decision will almost certainly increase calls in Congress for new antitrust laws. “This is a signal that the current antitrust laws are not good enough,” The Wall Street Journal quoted Hovenkamp as saying. “The decision will sober up those who think the current legislation is doing its job.”