In a pivotal ruling on Tuesday, a U.S. appeals court reinstated an antitrust lawsuit against Meta Platforms, Inc., the parent company of Facebook. The lawsuit, originally filed by the animated photo app Phhhoto, accuses Meta of manipulating its Instagram algorithm to suppress Phhhoto’s content, ultimately driving the app out of business.
The 2nd U.S. Circuit Court of Appeals, in a 2-1 decision, reversed a previous ruling by a lower court, which had dismissed the case on the grounds that it was filed outside the statute of limitations. The court determined that Phhhoto had provided sufficient evidence to suggest that Meta’s algorithmic changes were concealed, delaying the app’s ability to discover the suppression until it fell within the four-year window for filing an antitrust claim.
Judge Debra Ann Livingston, writing for the majority, emphasized that Phhhoto had met the burden of proof to proceed with its lawsuit, citing how Meta’s actions had not only stifled competition but also prevented the photo-sharing platform from accessing crucial growth opportunities. Judge Richard Wesley concurred with the decision.
However, Judge Denny Chin dissented, arguing that Phhhoto had enough information earlier to initiate the lawsuit, a position Meta continues to defend vigorously. “As we have said from the beginning, this suit is baseless, and we will continue to defend ourselves in court,” Meta stated following the ruling.
Phhhoto, launched in 2014, quickly gained popularity, amassing 10 million registered users within two years. However, the app ceased operations in 2017, citing Meta’s alleged anti-competitive practices as the primary factor behind its downfall. Phhhoto claims that Meta intentionally targeted the app to suppress its visibility on Instagram, depriving it of access to potential investors and hundreds of millions of dollars in capital.
Meta faces a growing number of antitrust lawsuits, including other consumer and government-driven actions. Notably, the company is slated to go to trial in April 2024 for a Federal Trade Commission (FTC) case that accuses Meta of acquiring Instagram and WhatsApp with the intent to eliminate emerging competition in the social media space. Meta has firmly denied these allegations, maintaining that its changes to Instagram’s content presentation were based on user preferences and engagement factors.
While the 2nd Circuit’s ruling does not address the substance of the antitrust claims, it marks a significant step forward for Phhhoto’s case against the tech giant. The outcome of this lawsuit, and other similar legal battles, could have broad implications for the future of competition and regulation in the tech industry.
Read more: