A federal appeals court has rejected a 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 bipartisan efforts to unwind the transactions.
In a unanimous decision affirming dismissal, a panel of the U.S. Court of Appeals for the District of Columbia Circuit found on Thursday that the state attorneys general waited too long to sue. “The States’ lawsuit is not only odd, but old,” wrote the three-judge panel.
Meta still faces an identical suit from the Federal Trade Commission, though that case now faces a steeper climb due to parts of the ruling undermining the agency’s position that Meta can be broken up years after it consummated deals that are being challenged.
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The states’ case revolved around 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 suit pointed to the company’s acquisitions of Instagram in 2012 and WhatsApp in 2014 to suppress competition and policies that allegedly shut out rivals from building competing apps.
Upholding dismissal of the suit from U.S. District Judge James Boasberg, the appeals court ruled that the case cannot move forward because of a legal doctrine known as “laches,” which bars legal action that aren’t brought in a timely manner.
“And so now 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 Circuit Judge A. Raymond Randolph.
The court said, for example, that Facebook 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 concluded that Facebook’s policies aimed at refusing to help competing social platforms, which are no longer in place, don’t violate antitrust laws. They found that a dominant firm has no duty to “lend its facilities” to its potential competitors.
“The app developers paid nothing to gain access to Facebook Platform,” Randolph wrote. “It was a privilege, and one highly sought.”
In making the finding, 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, it said, but turn out to be the opposite. Regardless, the court said that the “market often corrects even those that are anticompetitive.”
In a statement, a Meta spokesperson underscored that the social media market remains competitive.
“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,” the person said.
The New York attorney general’s office didn’t immediately respond to requests for comment.
