Let FTC ‘Fully Adjudicate’ Meta’s Within Buy, Says 23-State Amicus Brief

Twenty-three states, plus the District of Columbia and Guam, seek leave to file an amicus brief in support of the FTC’s preliminary injunction request blocking Meta’s Within Unlimited buy on antitrust grounds, said their motion Monday (docket 5:22-cv-04325) in U.S. District Court for Northern California in San Jose.

Meta’s proposed acquisition of Within “fits neatly into a pattern of recent acquisitions by Meta that have substantially harmed competition, innovation, and consumers, in large part by facilitating Meta’s rapid rise to dominance of digital spaces like the virtual reality space at issue in this case,” said their motion. The FTC consents to the filing of the amicus brief, while Meta opposes the filing as “purportedly untimely,” it said.

The amici seek to protect businesses and consumers in their states “from harm that may result if the FTC is denied the opportunity to fully adjudicate the lawfulness of Meta’s acquisition of Within before the acquisition takes place,” said the proposed brief. The states’ experience “demonstrates that the equities and the public interest favor a preliminary injunction of Meta’s acquisition of Within,” it said.

The FTC “is likely to prevail on the merits” because Meta’s Within buy “may substantially lessen competition and tend to create a monopoly by eliminating both perceived and actual potential competition,” said the proposed brief. The states “have long been at the forefront of efforts to investigate and address the potential harms to competition raised by digital platforms,” it said. More than two decades ago, a bipartisan coalition of states, coordinating with DOJ, “filed an antitrust complaint against an early dominant tech player, Microsoft, resulting in a landmark decision and a remedial decree requiring Microsoft to take numerous actions to promote competition in the market for personal computer operating systems,” it said.

For many of the same reasons that the FTC’s motion for a preliminary injunction should be granted, Meta’s pending motion to dismiss the FTC’s complaint “is meritless and should be denied,” said the proposed brief. Digital markets “are especially prone to threats” to competition, innovation and consumers, it said. Digital platforms like Meta’s “can amass market power across multiple complementary markets and features, allowing them to dominate entire digital realms, as Meta has dominated the personal social networking space and now increasingly dominates the virtual reality space at issue here.”

Meta’s dominance “has allowed it to become a gatekeeper, giving it power to dictate the terms of access to its digital spaces for other firms and for consumers,” said the proposed brief. “Wielding such market power, Meta has thrived by exploiting users’ data, both to keep users engaged with its products and to sell profitable targeted advertising,” it said. “Meta’s digital platforms share a distinctive set of features that can help entrench dominance.”

Meta’s digital platforms “exhibit strong economies of both scale and scope,” said the proposed brief. They benefit from growing by adding more users and by expanding into features that complement those the platform already offers, it said. “The additional users and features increase network effects, provide more data to the platform, and can increase entry barriers that rivals must overcome.” It also has become “increasingly clear” to the amici that digital platforms like Meta’s “have often cemented market dominance in large part through acquisitions,” it said.

Meta’s prior acquisitions “have harmed competition in a variety of ways -- underscoring that the FTC should be allowed to adjudicate the lawfulness of Meta’s current acquisition of Within before the acquisition is completed and potentially harms competition,” said the proposed brief. Meta’s past acquisitions “have sometimes eliminated nascent existing competitors operating in the same core space as the platform,” it said. Meta’s $1 billion Instagram buy, for example, “harmed competition by helping Meta eliminate an emerging competitor and entrench its market power over personal social networking services,” it said.