Federal appeals court tosses state antitrust suit seeking to break up Meta

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A group of states that sued to break up Facebook-parent Meta in 2020 were years too late to file their challenge and failed to make a persuasive case that the company’s data policies harmed competition, a federal appeals court ruled Thursday in a sweeping victory for the tech giant.

In siding with Meta, the decision by a three-judge panel of the US Court of Appeals for the DC Circuit upheld a lower-court decision tossing out the suit initially filed by New York and dozens of other states.

The decision is a blow to regulators who have cited Meta as a prime example of the way tech giants have allegedly abused their dominance. And it casts a shadow over a parallel antitrust case against Meta that was brought by the Federal Trade Commission at around the same time.

The states’ original complaint had sought to unwind Meta’s past acquisitions of Instagram and WhatsApp, accusing the company of a “buy-or-bury” approach that violated antitrust laws.

In 2021, a federal judge dismissed the complaint, saying that the lawsuit came long after the acquisitions had been completed in 2012 and 2014. Thursday’s appellate decision agreed.

“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,” wrote Senior Circuit Judge Raymond Randolph.

In addition, Randolph wrote, state allegations claiming that Meta’s — then Facebook’s — policies placing restrictions on app developers were anticompetitive didn’t hold up.

The policies in question, Randolph wrote, simply told app developers they could not use Facebook’s platform “to duplicate Facebook’s core products,” and did not rise to the level of an antitrust violation under federal law.

Although the states argued that Facebook’s policies at the time — which have since been removed — discouraged innovation by the company’s rivals, the complaint failed to establish how widely the policies affected Facebook’s third-party developers.

“The States thus have not adequately alleged that this policy substantially foreclosed Facebook’s competitors, giving us an additional reason to reject their exclusive dealing theory,” the court held.

A spokesperson for New York Attorney General Letitia James didn’t immediately respond to a request for comment.

In a statement, Meta said the state’s case reflected a mischaracterization of “the vibrant competitive ecosystem in which we operate.”

“In affirming the dismissal of this case, the court noted that this enforcement action was ‘odd’ because we compete in an industry that is experiencing ‘rapid growth and innovation with no end in sight,’ Meta said. “Moving forward, 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.”

In spite of Thursday’s decision, Meta must still face a similar lawsuit by the FTC, which also seeks to break up the company in connection with its Instagram and WhatsApp acquisitions.

Last year, the same federal judge who dismissed the state suit, James Boasberg, allowed the federal suit to proceed. Boasberg had tossed out the FTC suit as well in 2021, saying the agency had failed to make an initial showing that Meta holds a monopoly in personal social networking. But he permitted the FTC to re-file its complaint with changes.