The Quirk That Stuck Facebook With A Robust Antitrust Case
Without political pressure, the FTC waited to rally state attorneys general in a broad, bipartisan case against Facebook’s anticompetitive behavior.
Today, the Federal Trade Commission sued Facebook for a slew of antitrust violations, targeting the way the company eliminated its top competitors via the acquisitions of Instagram and WhatsApp. More than 40 state attorneys general filed a lawsuit mirroring the FTC’s, displaying broad, bipartisan coordination rare in an age of polarized, dysfunctional government.
By acting together, the state attorneys general will make Facebook’s life difficult, bringing a more robust lawsuit than the Department of Justice’s case against Google. There, only 11 state AGs joined, all of them Republican, giving Google an opportunity to play them off their counterparts. Facebook will have no such luck.
Luck is indeed the word. Facebook’s tougher circumstances aren’t due to more egregious behavior, but rather a political quirk. Here’s how it happened.
In June 2019, the Department of Justice and Federal Trade Commission split responsibility for overseeing the tech giants. Each would explore antitrust charges against two companies. The DOJ took Google and Apple. The FTC got Facebook and Amazon.
The two agencies worked on their cases for months, but as the November election neared, the Trump administration wanted action and began to press. And the pressure worked at the Department of Justice.
At the DOJ this fall, Attorney General William Barr’s team was working on an antitrust case against Google with attorneys general from “nearly every state” when the administration’s pressure intensified. The DOJ is part of the executive branch, and Barr serves at the pleasure of the president. So he pushed to get the case out the door.
Barr and the state AGs were on separate timelines though. Some AGs weren’t motivated by the election and wanted time to investigate further. Others might have been reticent to help Trump — or give that appearance — ahead of the vote. But Barr had a job to do. So he pushed the case forward. By the time the Justice Department brought its lawsuit in October, only 11 state AGs signed on. This was not the imposing coalition the DOJ hoped to wield against the trillion-dollar company.
The Federal Trade Commission operated differently. As an independent agency, it could take its time to settle on the strongest case, and not worry about political pressure. In fact, this summer, the Trump administration began interviewing replacements for FTC chair Joe Simons, seemingly unhappy he wasn’t on board with its plan to crack down on social media companies’ content moderation practices. But Simons is appointed, and the president can’t fire him outside of cases of gross negligence. Confirmed in 2018, his job was secure until September 2023. And so he stayed in place.
Without worrying about Trump’s electoral prospects, the FTC waited, solidified its case, and formed the broadest alignment with the state AGs. In the end, 48 attorneys general signed onto their own case mirroring the FTC’s, including those from 46 states, the District of Columbia, and Guam.
Facebook’s case will now be much tougher to fight than Google’s, since Google can play those AGs who are part of the DOJ lawsuit against those who are not. If some AGs who waited end up bringing their own lawsuit, Google’s lawyers could weaken both cases by pointing out the inconsistencies.
In Facebook’s case, however, a strong, bipartisan group of state attorneys general won’t suffer from disjointed arguments. This will make Facebook’s life quite painful.
Along with the cohesive argument, the broad coalition of AGs will bring more funds to the Facebook antitrust effort. As Big Technology readers know well, the FTC suffers from severe resource constraints. But funds from individual state AGs should help alleviate some of the burden.
“If it was just the federal government, it might be more of a mismatch,” Gigi Sohn, a fellow at the Georgetown Law Institute for Technology Law and Policy, told me. “Those are attorney general offices with budgets to hire their own experts, and you can multiply the resources.”
The FTC is seeking serious remedies, including breaking up Facebook by requiring it to divest Instagram and WhatsApp. Though the agency has failed to mount serious challenges to Facebook in the past — fining Facebook $5 billion for its failure to protect personal data last year, an amount the company could shrug off — this time could be different.
“If you're going to go down this road, you're not going for a settlement,” Sohn said. “You’re going for the win.”
This week on the Big Technology Podcast: Gary Vaynerchuk and TikTok’s Blake Chandlee on the ‘ban’ and TikTok’s future
TikTok is in a state of limbo as the U.S. government decides whether to ban it. In August, President Donald Trump signed an executive order banning the app from operating in its current form in the U.S. The order gave TikTok a 45-day deadline, but after a few extensions, we’re now in December, and TikTok is still running. As TikTok twists in the wind, Gary Vaynerchuk, owner of digital ad agency VaynerMedia, and Blake Chandlee, TikTok’s head of global business solutions, join the Big Technology Podcast in a recording at Web Summit to discuss the app’s present and future.
You can listen on Apple Podcasts, Spotify, and Overcast, and read the transcript on OneZero.
This has been an emergency edition of Big Technology. See you again next Thursday.
Two generational lawsuits at the same time in Big Tech. Saddle up!