U.S. Appeals Court Affirms Dismissal of Antitrust Lawsuit Against Meta Platforms

U.S. Appeals Court Affirms Dismissal of Antitrust Lawsuit Against Meta Platforms

The U.S. Court of Appeals for the District of Columbia Circuit affirmed the dismissal of antitrust claims against Facebook parent company Meta. The Court rejected the bid to revive an antitrust lawsuit brought by nearly every U.S. state, led by New York, challenging Meta’s acquisition of WhatsApp and Instagram in a blow to bilateral efforts to unwind the transactions.

The U.S. Court of Appeals in unanimous decision affirming dismissal, remarked that the state attorneys general waited too long to sue.

“The States’ lawsuit is not only odd, but old,” wrote the three-judge panel.

The states’ case focused on allegations that Facebook illegally monopolized the social networking market by ‘deploying a buy-or-bury strategy that thwarts competition and harms both users and advertisers.’

The plaintiffs included the attorneys general from 48 U.S. states and territories, had first sued Meta in December 2020, however a Federal Court had dismissed their case in 2021, as well as a parallel case by the Federal Trade Commission, which could have ultimately resulted in Meta being required to divest of Instagram and WhatsApp. After the District Court judge terminated the state’s case in January 2022, the states appealed this decision, arguing that the judge had made an error in terminating their case.

The suit alleged that the company’s acquisitions of Instagram in 2012 and WhatsApp in 2014 to suppress competition and policies had ostensibly shut out rivals from building competing apps.

At argument, the judges analyzed the central question as to whether the states brought their claims as sovereign entities enforcing federal law or as non-sovereign entities that are essentially the same as private plaintiffs.

The states, believed that their unprecedented delay to file ‘does not apply against sovereign states suing to protect the public interest, like the states here.’ The states vehemently asserted that the policies could violate antitrust law.

Upholding dismissal of the suit from U.S. District Judge James Boasberg, the Appeals Court ruled that the case cannot move forward while applying the legal doctrine known as ‘laches,’ which bars legal action that are not brought in a timely manner.

The Circuit Judge A. Raymond Randolph opined, “an injunction breaking up Facebook, ordering it to divest itself of Instagram and WhatsApp under court supervision, would have severe consequences, consequences that would not have existed if the States had timely brought their suit and prevailed.”

The Court flagged that as sovereigns, the states were not able to assert their right to bring an antitrust suit under the antitrust laws for the simple reason that to be entitled to file such a lawsuit, they must be referred to as 'people, firms, corporations or associations' which they are not.

The Court while narrating an example said, Facebook had decided to cancel plans in 2014 to develop Facebook Camera, a photo-sharing feature, after its acquisition of Instagram was approved. It stressed, “The more the merged firms are joined together, the more costly and difficult to separate.”

Relying on antitrust cases from other circuits, a four-year statute of limitations was used as a guideline for determining what amounted to undue delay.

The judges also stated that Facebook’s policies aimed at refusing to help competing social platforms, which were no longer in place, does not violate antitrust laws. They found that a dominant firm has no duty to “lend its facilities” to its potential competitors.

It also agreed that the District Court was correct that the States’ ‘exclusive dealing’ theory failed as a matter of law, as it only limited apps on Facebook but left app developers free to develop applications for Facebook competitors.

While concluding, the panel noted that Courts should proceed cautiously when asked to deem novel products or practices anticompetitive. Many innovations seem to violate antitrust laws at first, but turn out to be the opposite.”