Facebook Seeks to Dismiss Antitrust Suits

WASHINGTON— Facebook Inc. FB -0.32% on Wednesday asked a federal judge to dismiss antitrust lawsuits by the Federal Trade Commission and state attorneys general, arguing that government enforcers have no valid basis for alleging the social media giant is suppressing competition.

The FTC “utterly ignores the reality of the dynamic, intensely competitive high-tech industry in which Facebook operates,” the company said in seeking to dismiss the commission’s case. In a second motion, Facebook argued the states’ case “does not and cannot assert that their citizens paid higher prices, that output was reduced, or that any objective measure of quality declined as a result of Facebook’s challenged actions.”

The company’s filings in U.S. District Court in Washington mark its first legal salvo since the FTC and 46 states sued Facebook in December on allegations the company has unlawfully preserved monopoly status by freezing out and buying up potential competitors.

Facebook will have to meet a high legal standard to convince a federal judge to throw out the cases before trial. In order to prevail on a motion to dismiss, the company must show that the plaintiffs’ factual allegations about the nature of the marketplace, even if accepted as true, don’t establish a valid legal claim.

The FTC and the states each allege Facebook chose to buy companies rather than compete with them, with much of their cases focusing on the company’s past acquisitions of mobile-messaging service WhatsApp and Instagram, the photo-sharing platform.

The FTC previously allowed Facebook to make those acquisitions, but argues that time has shown that the company has used the deals to entrench a monopoly position. The states argue that a lack of competitors to Facebook has led to consumer harm, including by weakening privacy protections.

The FTC and the states are due to respond to the motions in April.

The FTC declined to comment Wednesday. New York Attorney General Letitia James asserted that “Facebook is wrong on the law and wrong on our complaint.”

“We are confident in our case, which is why almost every state in this nation has joined our bipartisan lawsuit to end Facebook’s illegal conduct,” Ms. James said in a statement.

Facebook in its papers noted that the FTC lawsuit came on a 3-2 vote and was brought at a time when the company was facing unrelenting criticism “for matters entirely unrelated to antitrust concerns.”

New York State Attorney General Letitia James outlined a sweeping antitrust suit against Facebook by the Federal Trade Commission and a bipartisan group of 46 state attorneys general, targeting the company’s tactics against competitors. Photo: Saul Loeb/AFP via Getty Images (Video from 12/9/20

The company said the commission hasn’t defined a relevant market that Facebook allegedly dominates. Nearly all of Facebook’s revenue comes from advertising, which is a relentlessly competitive market, the company said.

Facebook also argued the FTC hasn’t plausibly alleged the company has monopoly power, because the government can’t show that the company has raised prices or restricted output, given that “Facebook’s products are offered for free and in unlimited quantities.”

The company repeatedly emphasized that the commission previously allowed it to acquire Instagram and WhatsApp in 2012 and 2014, respectively. The FTC reviewed those deals at the time and decided not to challenge them.

The FTC and the states contend those acquisitions have served to eliminate rising, independent tech firms whose popularity could have allowed them to become important Facebook rivals.

The commission’s case, if successful, could potentially lead to Facebook having to unwind those deals.

Not all of the federal and state cases focused on Facebook’s acquisitions. Antitrust enforcers also alleged Facebook engaged in other anticompetitive conduct, including by cutting off access to its platform for third-party developers.

In response, Facebook in its legal papers said Supreme Court precedent made clear that it is under no obligation to give other firms access to its platform.

Attacking the states’ case, the company argued the attorneys general didn’t have proper legal standing to bring a case on behalf of their citizens, and it claimed the states waited too long to sue.

Write to Brent Kendall at brent.kendall@wsj.com

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