Big-tech critics regroup in push to reshape Facebook

U.S. District Judge James Boasberg ruled Monday that a Federal Trade Commission lawsuit was “legally insufficient,” saying the regulator didn’t show enough proof that Facebook was a monopoly and that its practices harmed competition. In another setback, the judge dismissed the case brought against Facebook by 46 states on grounds that, among other things, the attorneys general waited too long to bring their claims.

Lawmakers in Washington, meanwhile, are considering the path forward after a bruising battle last week to advance bills aimed at strengthening tech antitrust enforcement. Many business friendly Democrats are under pressure to delay or dilute the bills—which could facilitate the breakup of companies such as Facebook and Amazon.com Inc.—as are House Republicans.

“Anyone who thought this was going to be easy and quick should probably step back…the law is tough, the politics are tough,” said Harry First, an antitrust-law professor at New York University who worked on the states’ litigation against Microsoft Corp. more than 20 years ago.

Judge Boasberg ruled that the FTC didn’t show enough evidence that Facebook had monopoly power in the market for personal social-networking services. He also said that there is nothing necessarily unlawful about Facebook having a policy of restricting access to its tools and user data. The ruling left open the possibility that the federal plaintiffs could refile their case, but it illustrates how antitrust-law standards can be tough for regulators to meet.

Even if there is a public perception that tech companies are too big, “what antitrust law does is put to the test even things…that people seem to agree on,” said David Olson, an associate law professor at Boston College.

Several House members said the legal developments show the need for their proposed legislation to update antitrust laws for the internet age. Measures adopted by the House Judiciary Committee last week aim to block large technology platforms from favoring their own products and services, make it easier for users to migrate their data from one platform to another, prevent dominant platforms from killing off potential rivals through acquisitions, and make it easier for regulators to hive off operations of tech companies.

Reps. Jerrold Nadler (D., N.Y.) and David Cicilline (D., R.I.), the chairmen of the House Judiciary Committee and the House antitrust subcommittee, respectively, said those proposals are important to “address anticompetitive mergers and abusive conduct.”

Facebook has disputed claims from the FTC and lawmakers, saying that it competes fairly “to earn people’s time and attention.”

Bernstein analyst Mark Shmulik said the recent ruling shows the FTC’s case against Facebook was “weak to begin with” and the dismissal doesn’t change his investment thesis on the company, which recently crossed the $1 trillion market-cap threshold and whose stock he says is undervalued.

“They went out of their way to define a new market and excluded companies I would deem competitors,” he said of the government. “The judge recognized that.”

Even some advocates of change say the path ahead for the antitrust overhaul is rocky.

“There was disagreement among the Democrats in the committee, and not every Democrat voted for it, and some very senior members oppose [the bills],” House Majority Leader Steny Hoyer (D., Md.) said Tuesday. “Right now they’re not ready for the floor, and I don’t want to make a prediction as to when they’re going to be ready.”

Lawmakers also may seek to coordinate with the narrowly divided Senate, where Republicans have more influence, Mr. Hoyer said. Republicans often view the current rules more favorably and oppose more stringent standards as a potential source of economic uncertainty and unfairness.

For their part, the big tech companies also are lobbying hard to win over more allies in the House, ahead of new efforts to pass the bills, which lawmakers and lobbyists say could potentially happen in September.

One measure targeted for erasure by lobbyists is the bill that could potentially break up companies. It passed out of the committee on a 21-20 vote, a signal of its vulnerability.

“This restructuring by fiat is one of the most serious regulatory threats the industry has ever faced,” said Matt Schruers, president of the Computer and Communications Industry Association, a tech advocacy group, referring to the legislation called the Ending Platform Monopolies Act.

Some lawmakers representing districts in California, where companies such as Facebook and Alphabet Inc.’s Google are based, are wary of the impact the proposed legislation could have. During the House committee hearing, Rep. Zoe Lofgren (D., Calif.), who represents part of Silicon Valley, said the bill “would essentially, metaphorically, take a grenade and just roll it into the tech economy and blow it up and see what happens.”

This story has been published from a wire agency feed without modifications to the text