Facebook’s stock hit an all-time high after a judge dismissed the FTC’s complaint

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In a major legal win for Facebook, a US District Court judge has dismissed parallel antitrust complaints against the company that were filed by the Federal Trade Commission and a group of 48 state attorneys general.

The Federal Trade Commission (FTC) claimed last December that Facebook was “unlawfully maintaining its monopoly on personal social networks through a long track of anti-competitive behavior.” The complaint said Facebook had a “systematic strategy” to maintain monopoly power, including the acquisition of Instagram in 2012 and WhatsApp in 2014. Suggested remedies from the FTC included forcing both Instagram and WhatsApp, with Facebook requiring advance notice of future deals.

But Judge James Boasberg of the U.S. District Court for the District of Columbia dismissed the arguments presented in the FTC’s complaint, as well as arguments from states.

Although the court does not agree with all of Facebook’s claims here, it ultimately does agree that [FTC’s] The complaint is legally insufficient and therefore should be dismissed,” he wrote in his decision. “The FTC has failed to defend sufficient facts to establish a necessary component to all of its … claims — that Facebook has monopoly power.”

“We are pleased that today’s decisions acknowledge the flaws in the government complaints filed against Facebook,” a Facebook spokesperson said in a statement. “We compete fairly every day for people’s time and attention and will continue to deliver great products to the people and businesses that use our services.”

Facebook shares jumped on the news and closed 4.2% higher, to $355.64, pushing the company’s market value above $1 trillion for the first time ever. Prices for Apple (AAPL), Microsoft (MSFT), and Amazon (AMZN) were up about 1%, while Google’s Alphabet (GOOGL) was essentially flat.

In response to the court’s decision, an FTC spokesperson said: “The FTC is closely reviewing the opinion and evaluating the best option moving forward.”

A spokesman for the New York Attorney General’s Office said: “We are reviewing this decision and considering our legal options.”

Judge Boasberg, who was appointed by President Barack Obama to district court in 2011, says the complaint makes a “bare claim” that Facebook has a dominant market share of more than 60%. But he found the claim “unsupported,” and notes that it would be difficult to measure, given a lack of revenue, units sold or any other typical metric. He writes: “The FTC’s inability to provide any indication of the metric(s) or method(s) it used to calculate Facebook’s market share makes its vague ‘60%-plus’ assertion highly speculative and crucial moving forward.”

The judge left the door open for an amended complaint — dismissing the complaint, but not the case — allowing the FTC to file an amended complaint.

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In the ruling, the judge also found fault in claiming that there was anything illegal in Facebook’s policy of not allowing interoperability with other services.”[E]If the FTC has sufficiently advocated for market power, its challenge to Facebook’s policy of denying interoperability permissions with competing apps fails to mention a claim of injunction”[T]There is nothing illegal about having such a policy in general.”

But the court left the door open to reconsider the Instagram and WhatsApp deals. He writes: “The agency is on solid ground in scrutinizing acquisitions of Instagram and WhatsApp, as the court rejects Facebook’s argument that the FTC lacks the authority to seek injunctive relief against these purchases.” “Whether other issues arise at a later stage in the litigation depends on how the government wishes to proceed.”

Write to Eric J. Savitz at [email protected]

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