On December 3, 2020, Maximilian Klein and Sarah Grabert filed a class-action lawsuit against Facebook in the U.S. District Court for the Northern District of California, alleging certain privacy practices in violation of the Sherman Antitrust Act. The crux of Plaintiffs’ Class Action Complaint alleges that in exchange for providing services to Facebook’s users, Facebook collected user data, allowing advertisers to use it for targeted advertising to Facebook users. More specifically, Plaintiffs allege that Facebook and its affiliated companies (Instagram, Messenger, WhatsApp, Oculus) used this data to target smaller companies and competitors to eliminate competition and limit movement on the game board.
Plaintiffs’ request equitable and injunctive relief in the form of barring Facebook from engaging in wrongful behavior, requiring Facebook to seek third-party auditors to evaluate Facebook’s practices, and requiring Facebook to divest assets that allow Facebook to maintain its monopoly power. Facebook may argue that Plaintiffs do not have standing to assert these claims and that the alleged harms are not specific to Plaintiffs as Plaintiffs are voluntary users of the social media platform. In other words, Plaintiffs arguably consented to Facebook’s terms of service, which states that Facebook does not sell your personal information to advertisers unless the user provides specific consent. Facebook terms of service and data policy further explain how any non-personal information obtained from the user is used.
Since 2006, commentators note that Facebook has struggled with privacy concerns. Facebook has allegedly made several commitments to protect users’ privacy. Yet, commentators continue to suggest that Facebook exploits the user’s data for its pecuniary interests by selling the data to advertisers or using the data to track its competition. However, Facebook may be able to argue that it substantially invested in these companies to significantly improve these apps for the benefit of the user. In addition, Facebook may argue that the Federal Trade Commission approved these transactions as further evidence of lawful conduct.
This suit’s outcome may set a precedent for many tech companies’ antitrust investigations, such as Google, Amazon, and Apple. Although the basis for their investigations may be different, the effect may be the same. Therefore, the outcome of this suit may define antitrust enforcement in a digital era.