Facebook lawsuits would come … when the FTC decides how

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Enlarge / All Facebook, no matter how you look.

After more than a year of investigating Facebook, state and federal regulators are more than ready to launch a series of cases against Facebook, according to new reports, that is, as soon as agencies can find out. hear about how they actually want to do it.

New lawsuits against Facebook are expected to come before the end of January, writes the Wall Street Journal. The Federal Trade Commission and a coalition of attorneys general from 47 states and territories are expected to take action.

The state and federal polls are essentially looking at two broad categories of potentially anti-competitive behavior. The first has to do with the effects of Facebook on other companies that could or do compete with it. This is the survey that looks at mergers and acquisitions, large and small, as well as Facebook’s behavior towards companies that refuse a takeover.

No state, federal or international investigation seems to have slowed the Facebook acquisition frenzy. The company has already bought at least five companies this year, including a $ 400 million deal to buy Giphy in May. This wave shows no signs of stopping: Earlier today, Facebook said it was buying customer relationship management startup Kustomer in a deal the Wall Street Journal sets at around $ 1. billion dollars.

The second bucket is about actions that affect both users – the 2.7 billion people who use Facebook services – as well as other links in the digital supply chain, such as advertisers. It can also be antitrust concerns, like New York Attorney General Letitia James he told me when it launched the investigation, because the company’s actions could have “endangered consumer data, reduced the quality of consumer choice or increased the price of advertising”, all of which could potentially be considered anti-competitive.

States should eventually take legal action. However, the type of action regulators are taking is currently a sticking point in any federal matter. And as with any problem in Washington, the reasons boil down to politics.

When is a trial not a trial?

The FTC has two options when it wants to bring an action to block a merger or bring an antitrust action. He can sue in federal district court, as any other agency (or a group of state attorneys general) would – or he can file the case internally, before an FTC administrative judge, or ALJ.

Each choice has its advantages and disadvantages: If the FTC goes to federal court, it could side with the states case rather than going it alone. On the flip side, if the FTC takes the matter internally, it can build up a solid body of antitrust legal theories that it could then use in subsequent enforcement cases. There is also a political aspect: the FTC would use its own statutory capacities and show that it can, rather than appearing to leave all antitrust measures in the hands of the Department of Justice.

According to Politico, the five FTC commissioners are divided over how to proceed. President Joseph Simons would rather take the case to an ALJ rather than a federal court. Democratic commission members Rebecca Kelly Slaughter and Rohit Chopra are reportedly keen to sue, but seem undecided on whether to move forward with an ALJ or take federal court action. And the two Republican members of the commission, Christine Wilson and Noah Phillips, are “considered unlikely to support an FTC case against Facebook,” according to three sources Politico spoke to.

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Here’s where it gets tricky: The FTC, like the Federal Communications Commission, is designed to always have a 3-2 split, with the president and two commissioners belonging to the majority party and the other two commissioners belonging to the minority party. For four years, this 3-2 split has favored the Republicans. When Democratic President-elect Joe Biden is sworn in on January 20, Simons is generally expected to resign (just as FCC Chief Ajit Pai will), and the Biden administration will appoint a Democrat of their choice to the Senate. to confirm that the new president.

The Senate is the sticking point there. Current Senate Majority Leader Mitch McConnell (R-Ky.) Has a strong tradition of obstructing candidates from Democratic administrations, and Politico notes that, if he remains majority leader after the second round of the Georgia Senate in January, he could intentionally “slow down all Biden FTC nominees,” leaving the agency at a 2-2 deadlock for an extended period.

Once the ALJ makes a decision, Politico explains, FTC commissioners can review and possibly overturn the decision – essentially, a built-in appeal process. But if the commissioners get stuck – which, if there are only four, they might – then the ALJ decision stands and there are no more avenues of appeal available. So that could theoretically be an argument in favor of withdrawing the FTC case.

The clock is turning. No matter what Simons ends up deciding, he has about seven weeks to make the call.



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