The FTC and almost all of the State Attorneys General initiated separate antitrust lawsuits against Facebook on Wednesday.
Facebook has been under significant scrutiny over the past several years for a plethora of predatory and exclusionary tactics as well as grossly mismanaged privacy incidents (e.g., Cambridge Analytica and the 2016 election). Both cases deserve praise.
Importantly, it is now unequivocally true that the United States is in a new era of antitrust enforcement. There is still a long way to go as nearly every market in the economy is still heavily monopolized. But these cases, along with the DOJ’s antitrust case against Google, are critical first steps for the United States to start tackling its monopoly problem. Monopolies have been a systemic feature of the U.S. for too long, finally, it is being confronted.
I would like to take a moment to discuss the FTC’s case as it is more interesting than the State AGs’ case. What makes the case interesting is that the FTC purposefully chose to weaken its litigation strategy in two distinctive ways. First, the FTC could have chosen to bring the case in its own administrative forum instead of the federal courts. Second, the FTC could have brought the case under Section 5 of its Unfair Methods of Competition authority rather than (what it did in its case) under the Sherman Act. (Side note: the FTC can’t actually enforce the Sherman Act directly, it can though through its Section 5 authority, it is worded in this way for clarity for non-lawyers).
These points are the subject of my latest article in the Washington Monthly.
Below is the introduction. Click here for the full article. Thanks for reading.
After years of inadequate fines, paltry settlements for overtly unfair and deceptive practices, profoundly substandard merger reviews, and numerous instances of broken consumer trust and unwarranted privacy invasions, on Wednesday the Federal Trade Commission finally initiated a blockbuster lawsuit, alongside a separate suit with 48 state attorneys general, against Facebook.
While the FTC has a significant chance of prevailing in its suit, the agency made two decisions that substantially weakened its legal firepower.
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