The Federal Trade Commission is likely to charge Facebook with antitrust violations by the end of November, which three people familiar with the investigation say is the first major blow to the social media giant in a broader push to control big technology. But the Federal Trade Commission is considering handling the case internally, that is, turning it into an administrative case that is less public than federal court proceedings, and the agency has never filed a case of this size internally before.
The move could make it easier to win, but it would take years and could anger attorneys general from dozens of states, who have been pushing for a swift nationwide effort to force the company to change.
The lawsuit, which has been going on for 16 months, is expected to accuse Facebook, the world’s largest social network with 2.74 billion users, of unfairly stifling competition and keeping its data smothered in the face of smaller rivals.
The lawsuit could eventually force Facebook to end its acquisition of photo-sharing app Instagram and messaging platform WhatsApp.
Joe Simmons, the FTC’s chairman, favored the case before the agency’s administrative law judge, but colleagues spoke on condition of anonymity because of the confidentiality of the investigation. Simmons needs to convince at least two of his colleagues to agree to the executive action, and if Joe Biden takes office, the new chairman could overturn the plan. While both Republicans and Democrats have complained about the power of technology companies in recent years, progressives want Biden to be tougher on antitrust than the Trump administration, especially given the call by high-profile Democrats such as Senator Elizabeth Warren of Massachusetts to tear down Silicon Valley giants.
Classifying a case as an administrative one would cut off the possibility of states joining the lawsuit, and dozens of states are now investigating Facebook and are about to file their own lawsuits in federal court. They have been trying to persuade the FTC to join their joint effort, which would give them more resources and influence to demand big changes to Facebook’s business, such as prompting a court-ordered spin-off of Instagram and WhatsApp.
New York Attorney General Tish James’ office, which is leading the multistate investigation, has circulated a proposed antitrust complaint and given other states until last week to decide whether to sign it. As many as 30 states are expected to participate, and a complaint could be filed as early as next week, one of the people said. The Capitol Forum, a news service, first reported on the potential time for complaints in the state.
Representatives for Facebook and the FTC declined to comment. A spokesman for new York’s attorney general did not respond to a request for comment.
The FTC often uses its internal arbitration mechanisms to handle cases involving completed mergers or complex or novel legal theories, both of which exist in potential Facebook cases. But critics accuse the agency’s “internal courts” of allowing it to act as “judges, juries and executioners” in both internal proceedings. The agency’s commissioners are almost always on the side of FTC staff, not companies, and the process is lengthy and takes years to complete.
Even so, when companies appeal their decisions, the FTC wins most of the time, and then, unsurprisingly, these cases are referred to federal court. In 2016, a study by Maureen Ohlhausen, then a member of the FTC, found that the Court of Appeal had sided with the FTC in 61 per cent of cases over the past 40 years.