Facebook hits $1trln valuation as antitrust lawsuit rejected

Facebook shares saw biggest one-day rise since April, surging 4.2%, to $355.64 after the ruling

US District Judge James Boasberg has termed the lawsuits against Facebook as “legally insufficient” and didn’t provide enough evidence to prove that Facebook was a monopoly. The ruling dismisses the complaint but not the case, meaning the Federal Trade Commission (FTC) could refile another complaint.

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, he said.

Facebook shares saw biggest one-day rise since April, surging 4.2%, to $355.64 after the decision. This pushed the company’s value to over $1 trillion and made it the last of the big five American tech giants to pass the milestone.

The FTC said in a statement that it is closely reviewing the opinion and assessing the best option forward. The agency has 30 days in which to file a new complaint.

Boasberg closed that avenue for the states, however, in dismissing outright their separate complaint.

The US government and 48 states and districts sued Facebook in December 2020, accusing the tech giant of abusing its market power in social networking to crush smaller competitors and seeking measures such as a forced spinoff of the social network’s Instagram and WhatsApp messaging services.

The FTC had alleged Facebook engaged in a systematic strategy to eliminate its competition, including by purchasing smaller up-and-coming rivals like Instagram in 2012 and WhatsApp in 2014.

New York Attorney General Letitia James said when filing the suit that Facebook used its monopoly power to crush smaller rivals and snuff out competition, all at the expense of everyday users.

Richard Hamilton Jr., a former prosecutor and Justice Department antitrust attorney, said the judge, while finding the FTC’s arguments insufficient, gave the agency a sort of road map for how to bulk up its case in another round.

Whether government or private entity, you still need to sufficiently plead the case, Hamilton said. He noted that as Boasberg saw it, the FTC failed to demonstrate how it arrived at the claim that Facebook controls 60% of the market in social networking and how that market power is measured.

As the FTC and 48 state attorneys general have alleged, Facebook is a monopolist and it has abused its monopoly power to buy or bury its competitive threats, Rep. Jerrold Nadler, D-N.Y., who heads the Judiciary panel, and Rep. David Cicilline, D-R.I., the legislation’s lead sponsor, said.

In the weeks ahead, we will work to advance this legislation to restore choice, innovation and opportunity for American businesses and consumers, he said.

Rep. Ken Buck of Colorado, the chief Republican sponsor of the legislation, said the ruling shows that antitrust reform is urgently needed. Congress needs to provide additional tools and resources to our antitrust enforcers to go after Big Tech companies engaging in anticompetitive conduct.