The FTC's antitrust case against Meta could be great for privacy

When the FTC filed its antitrust case against Meta, many traditional competition lawyers said it couldn’t include privacy issues. The agency didn’t listen. Now, it’s winning.

FTC building exterior

The FTC may have found a surprising lever to get a handle on Big Tech’s data practices.

Photo: bpperry/Getty Images

Right after Thanksgiving in 2011, the Federal Trade Commission announced it had caught Facebook in several lies about privacy occurring over the prior two years. The company, it said, had agreed to a settlement and would be making changes going forward to protect users’ data.

The agreement, to put it mildly, doesn’t seem to have gone as the FTC planned. One $5 billion fine for privacy abuses and an unending stream of scandals later, the FTC is in the middle of litigation with the company now known as Meta over alleged antitrust violations, which were long thought to belong to an entirely separate area of law.

In a judge’s recent ruling in the competition case, though, the FTC may have found a surprising lever to get a handle on Big Tech’s data practices.

On Jan. 11, Judge James Boasberg denied Meta’s motion to dismiss the suit, essentially finding that if everything in the FTC’s complaint turns out to be true, the commission has put together a legally sound case. It’s an admittedly plaintiff-friendly standard, and proving all the claims are indeed true may well still be a “tall task” for the FTC once Meta can present its own evidence and arguments, Boasberg wrote. Still, at least as far as he was concerned, the FTC wasn’t invoking absurd or discredited legal theories.

That’s where privacy comes in: While the FTC alleges that Meta's acquisitions of Instagram and WhatsApp were anticompetitive, the commission also contends that the company’s shoddy privacy record arose because it faces no meaningful competition from rivals that might offer better data protections.

Other antitrust cases have looked at data as an asset, or complained that privacy protections are a pretext for anticompetitive behavior. In the lead-up to the FTC’s filing of the case in 2020, though, antitrust traditionalists and even some sympathetic experts essentially dismissed the novel notion that an enforcer could invoke privacy as a casualty of tech consolidation. They said it was academic at best — and at worst, a harebrained effort to cram the two main objections to Big Tech into one case.

Since the 1980s, judges in antitrust cases have looked for plaintiffs to focus on measurable price increases to consumers or, occasionally, to quantifiably decreased output. Privacy is neither, traditionalists pointed out, though it could be theoretically possible to analyze privacy as a type of product quality, and plaintiffs do sometimes invoke worse offerings to show harm. But even then, traditionalists said courts haven’t liked substituting their judgments about product quality for consumers’ opinions.

Jim Tierney, who had previously spent a decade overseeing tech-sector antitrust enforcement at the Justice Department, said at the time that a lawsuit “based on a data privacy theory of harm is not in the cards.” (Tierney was in private practice, and his law firm, Orrick Herrington & Sutcliffe, did work for Facebook, though he said he in particular didn’t.)

The FTC didn’t listen to the naysayers. In its original complaint, which was filed by a Republican-led commission during the Trump administration, the FTC cited potential benefits of more competition, including a boost in the “availability, quality, and variety of data protection privacy options for users, including, but not limited to, options regarding data gathering and data usage practices.”

Boasberg eventually dismissed that complaint, though he let the FTC try again and expressed no concerns about the claims regarding data protection. In the meantime, Lina Khan, a well-known critic of tech companies — and of the bipartisan focus, dating to the Reagan era, on prices in antitrust cases — had taken over the commission as chair.

Khan made clear in her academic writing, before joining the FTC, that she sees a nexus between privacy and competition. In fact, academics in general had been interested in the link between competition and privacy. Even some Republican enforcers — like Makan Delrahim, head of the DOJ Antitrust Division during the Trump administration — floated similar notions, which found their way into the antitrust complaint he filed against Google.

The revised FTC complaint, which Khan led, landed last summer and zeroed in on these issues, detailing how Facebook allegedly worsened privacy among other, more traditional harms.

“Facebook has also engaged in other activities that have degraded the user experience, including the misusing or mishandling of user data,” the revised complaint said, citing both the FTC’s 2011 privacy order and the 2019 mega-fine. “Facebook’s ability to harm users by decreasing product quality, without losing significant user engagement, indicates that Facebook has market power.”

‘Consumers care’

Despite the academic interest, and prosecutors’ claims in their lawsuits, there isn’t much modern precedent in the U.S. directly justifying Khan’s move. Even in the EU, where antitrust enforcement is relatively stronger, especially against tech, the question is fraught.

Meta wasn’t shy about pointing out the lack of prior rulings. “No court has ever endorsed the theory the FTC espouses here: that the amount of ‘privacy’ on a service can demonstrate monopoly power,” the company wrote when asking to have the new complaint dismissed. Indeed, Meta suggested, privacy can’t even be measured, and consumers have proven they like the status quo of free, ad-powered services.

That’s the motion that failed earlier this month when Boasberg said the FTC’s case could continue.

Boasberg cited existing statutes relating to spam to point out that actually, people might care deeply about such things. “The advent of federal legislation addressing various privacy and advertising concerns related to consumer technology is consistent with the intuitive notion that consumers care about these issues and may prefer stronger protections” in social networking, he wrote.

His ruling doesn’t seem to have been a one-off in federal courts, either. Three days after it came down, a U.S. judge in California denied part of Meta’s motion to dismiss a different antitrust lawsuit. That complaint comes from a group of consumers and advertisers whose allegations, as Judge Lucy Koh put it, include the notion that, “without competition, Facebook can extract additional ‘personal information and attention’ from users.”

Koh, too, allowed the privacy claims to proceed, writing: “Consumers have adequately alleged that their injury ‘flows’ from Facebook’s anticompetitive conduct.”

Alex Harman, competition policy advocate at liberal consumer advocacy group Public Citizen, said the FTC’s handling of privacy in the Meta case shows why enforcers should push the boundaries of competition law rather than relying on old interpretations that might not account for current business models.

“You might lose, but you might also win, and then you expand the coverage of the law,” he said, adding that the U.S. might have stopped Google’s acquisition of Fitbit and other deals if there had been better precedent.

Harman said that if that part of the FTC’s case ultimately prevails (in what could be a years-long process), it could be a boon not only to enforcers and other plaintiffs who want to bring cases based on privacy concerns with Big Tech, but also all kinds of product issues.

“The implication is far beyond just the biggest tech companies,” he said. “You could sub in any feature or benefit that is being anticompetitively squeezed out as a result of a consolidation.”


What the economic downturn means for pay packages

The war for talent rages on, but dynamics are shifting back to the employers.

Compensation packages could start to look different as companies reshuffle the balance of cash and equity.

Illustration: Nuthawut Somsuk/Getty Images

The market is turning. Tech stocks are slumping — which is bad news for employees — and even industry powerhouses are slowing hiring and laying people off. Tech talent is still in high demand, but compensation packages could start to look different as companies recruit.

“It’s a little bit like whiplash,” compensation consultant Ashish Raina said of the downturn. Raina, who mainly works with startups that have 200 to 800 employees, previously worked as the director of Talent at Index Ventures and head of Compensation and Talent Analytics at Box. “I do think there’s going to be an interesting reckoning in terms of pay increases going forward, how that pay is delivered.”

Keep Reading Show less
Allison Levitsky
Allison Levitsky is a reporter at Protocol covering workplace issues in tech. She previously covered big tech companies and the tech workforce for the Silicon Valley Business Journal. Allison grew up in the Bay Area and graduated from UC Berkeley.
Sponsored Content

Why the digital transformation of industries is creating a more sustainable future

Qualcomm’s chief sustainability officer Angela Baker on how companies can view going “digital” as a way not only toward growth, as laid out in a recent report, but also toward establishing and meeting environmental, social and governance goals.

Three letters dominate business practice at present: ESG, or environmental, social and governance goals. The number of mentions of the environment in financial earnings has doubled in the last five years, according to GlobalData: 600,000 companies mentioned the term in their annual or quarterly results last year.

But meeting those ESG goals can be a challenge — one that businesses can’t and shouldn’t take lightly. Ahead of an exclusive fireside chat at Davos, Angela Baker, chief sustainability officer at Qualcomm, sat down with Protocol to speak about how best to achieve those targets and how Qualcomm thinks about its own sustainability strategy, net zero commitment, other ESG targets and more.

Keep Reading Show less
Chris Stokel-Walker

Chris Stokel-Walker is a freelance technology and culture journalist and author of "YouTubers: How YouTube Shook Up TV and Created a New Generation of Stars." His work has been published in The New York Times, The Guardian and Wired.


How 'Zuck Bucks' saved the 2020 election — and fueled the Big Lie

The true story of how Mark Zuckerberg and Priscilla Chan’s $419 million donation became the 2020 election’s most enduring conspiracy theory.

Mark Zuckerberg is smack in the center of one of the 2020 election’s multitudinous conspiracies.

Illustration: Mike McQuade; Photos: Getty Images

If Mark Zuckerberg could have imagined the worst possible outcome of his decision to insert himself into the 2020 election, it might have looked something like the scene that unfolded inside Mar-a-Lago on a steamy evening in early April.

There in a gilded ballroom-turned-theater, MAGA world icons including Kellyanne Conway, Corey Lewandowski, Hope Hicks and former president Donald Trump himself were gathered for the premiere of “Rigged: The Zuckerberg Funded Plot to Defeat Donald Trump.”

Keep Reading Show less
Issie Lapowsky

Issie Lapowsky ( @issielapowsky) is Protocol's chief correspondent, covering the intersection of technology, politics, and national affairs. She also oversees Protocol's fellowship program. Previously, she was a senior writer at Wired, where she covered the 2016 election and the Facebook beat in its aftermath. Prior to that, Issie worked as a staff writer for Inc. magazine, writing about small business and entrepreneurship. She has also worked as an on-air contributor for CBS News and taught a graduate-level course at New York University's Center for Publishing on how tech giants have affected publishing.


From frenzy to fear: Trading apps grapple with anxious investors

After riding the stock-trading wave last year, trading apps like Robinhood have disenchanted customers and jittery investors.

Retail stock trading is still an attractive business, as shown by the news that crypto exchange FTX is dipping its toes in the market by letting some U.S. customers trade stocks.

Photo: Lam Yik/Bloomberg via Getty Images

For a brief moment, last year’s GameStop craze made buying and selling stocks cool, even exciting, for a new generation of young investors. Now, that frenzy has turned to fear.

Robinhood CEO Vlad Tenev pointed to “a challenging macro environment” marked by rising prices and interest rates and a slumping market in a call with analysts explaining his company’s lackluster results. The downturn, he said, was something “most of our customers have never experienced in their lifetimes.”

Keep Reading Show less
Benjamin Pimentel

Benjamin Pimentel ( @benpimentel) covers crypto and fintech from San Francisco. He has reported on many of the biggest tech stories over the past 20 years for the San Francisco Chronicle, Dow Jones MarketWatch and Business Insider, from the dot-com crash, the rise of cloud computing, social networking and AI to the impact of the Great Recession and the COVID crisis on Silicon Valley and beyond. He can be reached at bpimentel@protocol.com or via Google Voice at (925) 307-9342.


Broadcom is reportedly in talks to acquire VMware

It hasn't been long since it left the ownership of Dell Technologies.

Photo: Yichuan Cao/NurPhoto via Getty Images

Broadcom is said to be in discussions with VMware to buy the cloud computing company for as much as $50 billion.

Keep Reading Show less
Jamie Condliffe

Jamie Condliffe ( @jme_c) is the executive editor at Protocol, based in London. Prior to joining Protocol in 2019, he worked on the business desk at The New York Times, where he edited the DealBook newsletter and wrote Bits, the weekly tech newsletter. He has previously worked at MIT Technology Review, Gizmodo, and New Scientist, and has held lectureships at the University of Oxford and Imperial College London. He also holds a doctorate in engineering from the University of Oxford.

Latest Stories