D.C. Circuit Affirms Lower Court's Dismissal of States’ Antitrust Suit vs. Meta
Attorneys general in New York and more than 45 states waited too long to bring an antitrust lawsuit against Meta for alleged anticompetitive conduct in its buys of Instagram and WhatsApp, a three-judge panel for the U.S. Appeals Court for the D.C. Circuit ruled Thursday, affirming a district court decision, in docket 21-7078.
The states’ lawsuit “is not only odd, but old,” said the opinion. The litigation is odd because it concerns an industry “that has had rapid growth and innovation with no end in sight,” it said. It’s old because the states’ causes of action “accrued in 2012 when Facebook acquired Instagram and in 2014 when Facebook acquired WhatsApp,” it said. Yet the states didn’t file their complaint until December 2020, it said. The U.S. District Court for the District of Columbia said the states’ long delays were unreasonable and unjustified as a matter of law, and the D.C. Circuit agreed.
AGs from 48 states and territories, including Washington, D.C., sued Meta in December 2020, alleging antitrust law violations stemming from “acquisitions of several actual or potential competitors and its restrictions on developers of applications that linked to Facebook,” said the filing. U.S. District Judge James Boasberg dismissed the case in June 2021. The three-judge panel said they agreed with Boasberg’s “comprehensive and well-reasoned opinion determining that the States’ Platform-based allegations failed to state a cause of action.” Circuit Judge Raymond Randolph wrote Thursday's opinion on behalf of Judges Karen Henderson and Robert Wilkins. Offices for New York AG Letitia James (D) and Washington, D.C., AG Brian Schwalb (D) didn’t comment.
“As the Court of Appeals rightly recognized, this case fundamentally mischaracterized the vibrant competitive ecosystem in which we operate,” Meta said in a statement Thursday. The company noted the court called the enforcement action “odd” because Meta competes in a rapidly and ever-growing industry. Meta will “defend itself vigorously against the FTC’s distortion of antitrust laws and attacks on an American success story that are contrary to the interests of people and businesses who value our services,” the company said.
Thursday’s opinion noted the FTC investigated the WhatsApp acquisition and didn’t take any action against the company in 2014 and investigated the Instagram purchase and closed the case in 2012 without taking action. The opinion said the states were “on notice” of both acquisitions, as “both were publicized.”
An injunction breaking up Facebook and ordering the company to divest Instagram and WhatsApp would “have severe consequences, consequences that would not have existed if the States had timely brought their suit and prevailed,” said Thursday’s opinion. The court cited a summary from the district court, noting the states acknowledge that since at least 2016, Facebook has made business decisions and “allocated firm resources” based ownership of Instagram and WhatsApp, which are “integrated” into Meta’s “core business.”
The district court correctly found the states’ “exclusive dealing” theory against Meta failed, the panel said. For such a claim to survive a motion to dismiss, the plaintiffs must adequately allege the “exclusive contract ‘caused substantial market foreclosure,’” the court said. The states simply alleged Meta’s competitor integration policy “discouraged developers from creating apps that bridged” multiple social networks, the court said: The states haven’t “adequately alleged that this policy substantially foreclosed Facebook’s competitors, giving us an additional reason to reject their exclusive dealing theory.”