Meta Platforms Inc. will face antitrust claims alleging it forced a social media photo-video startup out of business. The US Court of Appeals for the Second Circuit reversed a lower court ruling that had dismissed the case.
The defunct social media app Phhhoto had filed the lawsuit claiming that Meta’s actions led to its failure. The lower court had stated that Phhhoto waited too long to sue Meta under the Sherman Act’s four-year statute of limitations. However, the Second Circuit panel vacated the district court’s decision after conducting an independent review of Phhhoto’s amended complaint.
The court concluded that the startup could pause the limitations in the Sherman Act, allowing the case to proceed despite the elapsed time. Phhhoto’s lawsuit claims that Meta used various anticompetitive tactics, including the introduction of an algorithmic feed on Instagram designed to suppress Phhhoto’s content. Phhhoto discovered that posts from a separate account received more likes and views compared to those from its official account, even though the latter had significantly more followers.
Meta antitrust lawsuit moves forward
This discrepancy suggested algorithmic manipulation to favor Meta’s platforms. The initial dismissal by the district court was based on the conclusion that the four-year statute of limitations for antitrust claims had expired.
However, Phhhoto argued that it discovered the alleged algorithmic manipulation only in December 2018, based on documents made public during a federal lawsuit in California. It was revealed that Meta had used a program to manipulate posts and content for its own benefit. Phhhoto also claimed that ahead of Instagram’s algorithmic feed launch in March 2016, Meta withdrew Phhhoto’s access to the “Find Friends” API, which allows third-party apps to tap into Meta’s social network.
Additionally, Meta terminated plans to integrate Phhhoto’s content into the Facebook News Feed. The appeals court has not made a final decision on the merits of the case but concluded that the lower court erred in its dismissal, particularly in its analysis of fraudulent concealment. The case will now return to the district court for trial.
Responding to a request for comment, a Meta spokesperson said, “As we have said since the beginning, this suit is baseless and we will continue to vigorously defend ourselves.”
The decision highlights ongoing legal challenges for Meta, as it faces scrutiny over its competitive practices and their impact on smaller rivals in the social media landscape. The outcome of this case could have significant implications for how digital platforms handle competition and innovation in the social media space.
