Facebook loses bid to end data antitrust lawsuits, Google Pact

Meta Platforms Inc. Facebook faces antitrust litigation over its alleged advertising pact with Alphabet Inc. Google and its alleged strategy of building a social media empire by misleading users about its data privacy practices, a federal judge in San Jose, California has ruled.

Judge Lucy H. Koh let proposed class actions move forward against Facebook on behalf of consumers and advertisers, citing “more than plausible” allegations that the tech giant used lies and misleading claims about privacy. data to gain a dominant competitive advantage over rival truth platforms.

“By selling increased amounts of data to third parties while telling users it was keeping the data private, Facebook increased its user base and profits,” Koh wrote on January 14. “Facebook users’ deception has allowed Facebook to prevent sophisticated rivals, like Google, from entering the market.

The ruling comes days after a federal judge in Washington, D.C. advanced an enforcement case brought by the Federal Trade Commission, which is seeking to unwind Facebook’s acquisitions of Instagram and WhatsApp over its alleged strategy to copy , to acquire or kill promising startups.

Koh, writing for the U.S. District Court for the Northern District of California, used several statements by founder Mark Zuckerberg against the company, saying they suggested he and other top executives knew stiff competition would force Facebook to restrict its data collection.

Statements show Facebook bending over backwards to avoid scandal while Google rolled out its ill-fated social network, Google+, which company executives viewed as a competitor unlike other popular digital platforms like YouTube, the judge said in a 107-page opinion.

She dismissed Facebook’s wide-ranging attacks on legal theories advanced by consumers and advertisers, repeatedly calling them “baseless” and “unconvincing.”

The lawsuits adequately defined the social media market, a submarket made up of “social media” platforms like Facebook, and the company’s dominant share in each, Koh found. She cited high barriers to market entry, such as “network effects” and “switching costs.”

Nor are the claims premature under the four-year statute of limitations, the judge said, pointing to allegedly false statements Zuckerberg allegedly recently made about the company’s compliance with an FTC confidentiality agreement and the scope of its data sharing with third parties such as Cambridge Analytica.

Koh tentatively narrowed the dispute, saying consumers and advertisers failed to substantiate their antitrust theory based on the same alleged “copy, acquire, kill” strategy that is at the center of the FTC case.

The company’s acquisitions of Instagram and WhatsApp go back too long, and the consolidated lawsuits lack details about what, if anything, Facebook has done more recently with the data it misleadingly harvested from users , said the judge. These claims can be refiled, she added.

Quinn Emanuel Urquhart & Sullivan LLP and Hagens Berman Sobol Shapiro LLP are acting lead co-attorneys for consumers, who are also represented by Lockridge Grindal Nauen PLLP.

Bathaee Dunne LLP and Scott & Scott LLP are acting lead co-counsel for the advertisers, who are also represented by Adhoot & Wolfson PC and Levin Sedran & Berman LLP.

Facebook is represented by Wilmer Cutler Pickering Hale & Dorr LLP.

The deal is Klein v. Facebook Inc., ND Cal., no. 20-cv-8570, 1/14/22.

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