Posts with «company legal & law matters» label

Judge dismisses FTC’s initial antitrust complaint against Facebook

A federal judge has dismissed the FTC’s initial antitrust complaint against Facebook, saying it was “legally insufficient.” While it’s an early win for Facebook, the FTC’s antitrust case against the company isn’t necessarily over. The judge noted that the FTC can file an amended complaint in the next 30 days.

But Judge James Boasberg said that the FTC would need to provide more evidence to back up its claims that Facebook is a monopoly. “The FTC has failed to plead enough facts to plausibly establish a necessary element of all of its Section 2 claims — namely, that Facebook has monopoly power in the market for Personal Social Networking (PSN) Services,” Boasberg wrote. “The Complaint contains nothing on that score save the naked allegation that the company has had and still has a ‘dominant share of th[at] market (in excess of 60%).’”

Separately, Judge Boasberg also dismissed the antitrust lawsuit against Facebook filed by attorneys general from 48 states and territories. The suits, which were announced alongside the FTC’s, said Facebook had illegally stifled competition. But the judge wrote that too much time had passed for the case to move forward.

The FTC and the states had filed antitrust charges against the company in December, saying the company had engaged in anti-competitive behavior in acquiring competitors like WhatsApp and Instagram in an effort to neutralize companies it saw as a threat. The cases also cited Facebook’s dealings with competitors like Snapchat and Vine.

The dismissals are a notable victory for Facebook, which had argued that neither the states or the FTC had a credible antitrust case. The social network had accused the FTC of seeking a “do-over” for acquisitions it had previously approved. In response to the FTC suit, the judge noted the agency “is on firmer ground in scrutinizing the acquisitions of Instagram and WhatsApp.”

It’s not yet clear how the FTC will respond, but it’s hardly the end of Facebook’s antitrust woes. Congress recently introduced v, including one that would target major acquisitions like Facebook’s deals for WhatsApp and Instagram. The company is also facing antitrust investigations by regulators in the UK and European Union.

Update 6/28 4:55pm ET: In a statement, Facebook said it was "pleased" with the judge's decisions. "We are pleased that today's decisions recognize the defects in the government complaints filed against Facebook. We compete fairly every day to earn people's time and attention and will continue to deliver great products for the people and businesses that use our services." 

Juul will pay $40 million to settle a vaping lawsuit in North Carolina

Vape pen maker Juul has agreed to pay $40 million to settle a lawsuit in North Carolina, which alleged that the company marketed and sold its products to young people. The state will use the money to fund programs that prevent e-cigarette addition and to help people quit e-cigarettes. The cash will also finance research into e-cigarettes.

As part of the consent order, Juul denied any liability or wrongdoing. However, it agreed to a number of changes to its business practices in the state. Most social media and influencer advertising are off limits, and the company can't have ads near schools or sponsor concerts or sporting events. Juul and retailers that sell its products online will need to use an independent verification system to make sure customers are of legal age.

Juul will need to run a secret shopper program to make sure retailers aren't selling its vape pens to anyone under the age of 21. Retailers will need to keep Juul products behind their counter too. In addition, the company can't introduce new flavors or change nicotine content levels without approval from the Food and Drug Administration (FDA). 

“For years, Juul targeted young people, including teens, with its highly addictive e-cigarette. It lit the spark and fanned the flames of a vaping epidemic among our children – one that you can see in any high school in North Carolina," North Carolina Attorney General Josh Stein said in a statement. “This win will go a long way in keeping Juul products out of kids’ hands, keeping its chemical vapor out of their lungs, and keeping its nicotine from poisoning and addicting their brains."

A Juul spokesperson sent the following statement to Engadget:

This settlement is consistent with our ongoing effort to reset our company and its relationship with our stakeholders, as we continue to combat underage usage and advance the opportunity for harm reduction for adult smokers. Importantly, we look forward to working with Attorney General Stein and other manufacturers on the development of potential industry-wide marketing practices based on science and evidence. In addition, we support the Attorney General’s desire to deploy funds to generate appropriate science to support North Carolina’s public health interventions to reduce underage use.

We seek to continue to earn trust through action. Over the past two years, for example, we ceased the distribution of our non-tobacco, non-menthol flavored products in advance of FDA guidance and halted all mass market product advertising. This settlement is another step in that direction.

Stein started investigating Juul in 2018 and sued the company the following year for "designing, marketing, and selling its e-cigarettes to attract young people and for misrepresenting the potency and danger of nicotine in its products." More than a dozen other states have sued Juul for similar reasons, though the North Carolina case is the first to reach a resolution. 

The Federal Trade Commission also filed a lawsuit against Juul, Marlboro owner Altria and others with the aim of undoing a 2018 investment that gave Altria a 35 percent stake in the vape pen maker. The agency argues that agreements between the two companies stifled competition and violated antitrust laws. Meanwhile, the FDA opened a criminal investigation into vaping in 2019.

Facebook files to dismiss FTC antitrust charges

Facebook says the antitrust lawsuits targeting the company’s acquisitions of Instagram and WhatsApp should be dismissed. The company issued its first official response to antitrust charges from the Federal Trade Commission and 46 state attorneys general, saying that the government was seeking a “do-over.” Facebook filed motions to dismiss both cases.

In a statement, the company said neither lawsuit had made a credible case for antitrust. “Antitrust laws are intended to promote competition and protect consumers,” Facebook wrote. “These complaints do not credibly claim that our conduct harmed either.” The response comes three months after the company was hit with antitrust charges from the FTC and the state attorneys general.

Both cases allege that Facebook has engaged in anti-competitive behavior and that its deals to acquire Instagram and WhatsApp were meant to neutralize companies it saw as a threat. Facebook said this amounted to a do-over as both acquisitions were scrutinized, and approved, by the FTC years ago.

In a new court filing, Facebook’s lawyers say that the FTC “has not alleged facts amounting to a plausible antitrust case,” and that the charges come amid a “fraught environment of relentless criticism of Facebook for matters entirely unrelated to antitrust concerns.” Regarding the case from state AGs, Facebook says that the states “lack standing to bring the case” and that they “waited far too long to act.” In its motion to dismiss the state charges, Facebook referred to the states’ case as “afterthought claims.”

In addition to its acquisitions, both cases also pointed to Facebook’s platform policies, and how it treated third-party developers. The state case and the FTC lawsuit both called out Facebook’s treatment of Twitter-owned Vine, which saw its access to Facebook’s API cut off in 2013 in a decision that was approved by Mark Zuckerberg. In its motion to dismiss the FTC case, Facebook lawyers said the company “had no duty to make its platform available to any other app.”

The FTC and the state AGs have until April to respond to Facebook’s motions to dismiss. As The Wall Street Journal points out, actually getting the charges dismissed before a trial requires Facebook to “meet a high legal standard” that may be difficult to clear. Even if it did, a dismissal would hardly be the end of Facebook’s antitrust woes. The company is also facing an antitrust investigation from Congress and regulators in the European Union.