Facebook's Antitrust Case: 'It Will Be Very Difficult To Break Up'

Facebook, Inc FB shares traded higher on Monday, briefly reaching a $1 trillion market cap, after a judge dismissed two antitrust lawsuits against Facebook brought by the FTC and a coalition of U.S. states.

Bank of America analyst Justin Post said the dismissals are a rare victory for big tech companies amid a broad push toward more regulation.

What Happened? The current Facebook case is focused on the social media company's allegedly non-competitive practices of buying Instagram in 2012 and WhatsApp in 2014. The judge presiding over the case also criticized the FTC for waiting so many years after the deals to file an antitrust case.

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“We think the ruling suggests that it will be very difficult to break-up Facebook on the grounds that the acquisitions should not have been approved 7 and 9 years ago, and government’s cases will have to focus more on current marketplace share and behavior,” Post wrote in a note.

He said the success and growth trajectories of Snap Inc SNAP and TikTok in recent years may be the best defense for Facebook.

What’s Next: The bad news for Facebook investors is the FTC and state coalition now has 30 days to refile the case after it has more clearly defined the market in question and made a more definitive case in defining Facebook’s share of it. Post expects a refiling, but the dismissal is a clear reminder of how difficult antitrust cases can be to prosecute.

After discussions with legal experts, Post said it appears unlikely Facebook will get broken up based on historical precedent. For now, at least, Post maintains a Buy rating and $400 price target for Facebook.

Benzinga’s Take: There is no question Facebook has a tremendous amount of power and influence over the social media space, including extremely important areas such as news dissemination, censorship, politics and data. However, antitrust laws protect against legally defined monopolies not just powerful corporations, so the cases against Facebook and the other FAANG stocks that they are breaking the law may be more difficult to prove in court than investors realize.