A federal judge threw out antitrust complaints against Facebook from the Federal Trade Commission and 48 state attorneys general on Monday, after deciding the agencies hadn’t come up with persuasive evidence that the social media giant wields monopoly power.
The stakes for Facebook in this case are high, as a win for the FTC would seek to roll back acquisitions of Instagram and WhatsApp, two apps under Facebook’s control that enjoy billions of monthly users. After the news of the complaints’ dismissal, Facebook stock soared about 4% on Monday, reaching a $1 trillion market cap for the first time ever.
But in Monday’s decision, the courts were clear: The FTC simply didn’t do the work to prove anything.
“These allegations — which do not even provide an estimated actual figure or range for Facebook’s market share at any point over the past ten years — ultimately fall short of plausibly establishing that Facebook holds market power,” the court wrote.
Now the FTC has to trudge back to the drawing board with a tight July 29 deadline to file a new complaint, this time hopefully with a little more evidence to back up its claims.
This time around, though, the FTC has a new leader. When the case against Facebook was first filed in December 2020, the agency was chaired by Joseph Simons, a Trump appointee and former corporate antitrust lawyer who represented large tech firms like Microsoft and Sony.
Simons wasn’t a slouch in the FTC chair role, as he oversaw the massive $5 billion fine levied on Facebook for failing to protect user privacy. But a Simons-led agency just proved unable to even make an argument that Facebook had an overwhelming market share, let alone that it abused that position.
Compare that to the new FTC chairperson, Lina Khan, who took the helm on June 15, is a key antitrust thinker and has been cast as an ardent critic of big tech, most notably displayed in a 2016 piece for the Yale Law Journal titled “Amazon’s Antitrust Paradox.” In the piece, she argued that simply using the price of products to gauge consumer welfare was insufficient to truly test whether a company held monopoly power. After all, Amazon’s acquisition of Whole Foods fueled a concern was that the company had enough cash to artificially lower prices and choke out competition. That behavior is clearly anti-competitive, but doesn’t immediately harm consumers.
Parallels can be drawn to Facebook, a free service, which does not fit neatly into existing antitrust law. Instead of using price as leverage to recruit and retain users, Facebook leverages its access to your friends, your family, and the experiences they share on the platform. That is the challenge that Khan inherits.
A Khan-led FTC is a clear sign that the Biden administration is more serious about the regulation of big tech, especially through interpretations of antitrust laws. And by the court’s July 29 deadline, we should have a much better idea of just how aggressive Khan’s FTC plans to be.
Dave Gershgorn
@DaveGershgorn
NEWSWORTHY
SoftBank kills Pepper. SoftBank Group Corp has ended production of its iconic Pepper robot, the humanoid machine with a tablet bolted to its chest, according to a report from Reuters. Earlier this month the company also sold off a majority of its stake in Boston Dynamics, the robotics company known for terrifying robot dog called Spot. These divestments calls SoftBank's future in robotics into question, a puzzling move given how bullish CEO Masayoshi Son had previously been on the sector.
The Silicon Valley elite back a new crypto. Former Y Combinator head Sam Altman is cofounding a new cryptocurrency called Worldcoin, which has the goal of advancing universal basic income and would require iris scans to verify users' identities, according to Bloomberg. Details are slim, as Bloomberg uncovered the startup before its launch, but the coin has backing from Andreessen Horowitz, Coinbase, and LinkedIn cofounder Reid Hoffman.
Google in the antitrust crosshairs. Facebook isn't the only big tech firm facing scrutiny for its monopolistic market position, Bloomberg reported. The U.S. Department of Justice has interviewed Google competitors in recent months about the search giant's advertising technology practices, the report claims. Google is already grappling with a previous DOJ lawsuit over its monopolistic position in search, and now it appears the agency is also targeting the firm's main avenue for generating revenue.
Microsoft puts Xbox games on the iPhone. The rise of cloud computing is radically changing the multi-billion dollar gaming industry. Microsoft has officially released its xCloud gaming product, which allows subscribers to stream video games from Microsoft servers to Apple iOS devices and PCs. While Google and Amazon have attempted their own versions of game streaming services, Microsoft has a deep library of Xbox games to make the service actually worthwhile.
How do you say IPO in Italian? Duolingo, the language-learning app with a passive-aggressive personality has filed to go public on the NASDAQ exchange, according to TechCrunch. The company earned $161 million in revenue in 2020, representing 126% growth compared to 2019. It is also profitable on an adjusted basis, which can be a rarity among consumer-facing startups.
FOOD FOR THOUGHT
The global space industry is still nascent, but whether it's SpaceX or Russian cosmonauts, the human body is still a limiting factor when leaving Earth's atmosphere. Initial experiments, like those performed with NASA astronaut Scott Kelly, have shown that space travel takes a toll on the heart and immune system.
If commercial spaceflight is about to boom, will its long-term success depend on companies that can alter humans to survive beyond our atmosphere?
Christopher E. Mason, a Weill Cornell Medicine professor who lead one of the NASA teams to study the impact of space on Kelly's body, contends that they key to long-term space travel is genetic alteration. In a Bloomberg Opinion interview, Mason talks about the potential to re-engineer the human genome to make spaceflight accessible to anyone, rather than highly-trained and fit astronauts.
"The commercial space companies are looking at people who are regular Jacks and Jills, maybe older, maybe being in less decent shape, might have other co-morbidities that might give them a higher risk. As commercial space flight opens up space, it democratizes space. We don’t know how a less fit human body will do in flight, but we’re going to find out soon. If we do this well, and carefully, soon it will be everyone’s right."
IN CASE YOU MISSED IT
Support for making Bitcoin legal tender grows in Latin America by Marco Quiroz-Gutierrez
We can now edit genes inside the body. That sent this biotech’s stock soaring by Sy Mukherjee
Southeast Asia’s most valuable company has an edge in the battle of the super-apps: its gaming business by Simon Willis
Chinese tech IPOs fuel Hong Kong stock exchange’s best first half ever by Yvonne Lau
BEFORE YOU GO
What's in a link? Instagram has conveyed prestige and authority to certain accounts through the simple ability to share a link in a person's Story, which is only available to those accounts with more than 10,000 followers.
But now Instagram is rethinking the link economy. A new test detailed by The Verge lets anyone (in the test group) create a link in the form of a sticker that's placed over the Story's image or video. This change, while slight, could revolutionize the way smaller accounts are able to sell products or share news articles.
The test is in early stages, but it could have massive ramifications to Instagram. That is, if the courts decide to allow Facebook to keep Instagram, of course.
