Appeals court reinstates antitrust lawsuit against Meta
- A U.S. appeals court has ruled that Phhhoto's antitrust claims against Meta should be heard in court.
- Phhhoto alleges that Meta copied its app features and manipulated Instagram's algorithm to suppress its growth.
- The case raises important questions about competition and antitrust laws in the social media industry.
In the United States, an antitrust lawsuit filed by Phhhoto against Meta is set to return to the courts following a recent appeals court ruling. The lawsuit, which was initiated in late 2021, claimed that Meta had infringed upon U.S. antitrust laws by copying critical features from Phhhoto and impeding competition in the social media landscape. Initially, U.S. District Judge Kiyo Matsumoto dismissed the complaint in 2023, citing the expiration of the applicable statute of limitations, which is typically four years under the Sherman Act. However, upon appeal, the court determined that the lower court had made an error regarding the statute of limitations' applicability, thus allowing for a reevaluation of the case. The antitrust case centers on accusations that Meta’s introduction of an algorithmic feed on Instagram negatively impacted Phhhoto by making its content less visible and reducing user engagement. Phhhoto argued that it discovered this algorithmic manipulation when comparing the engagement levels of posts shared from different accounts. Specifically, a video posted from a separate account gained significant traction despite Phhhoto's official account having substantially more followers, raising questions about Meta’s competitive practices. Furthermore, Phhhoto claims to have faced additional tactics aimed at harming its business, including the withdrawal of access to the 'Find Friends' API prior to Instagram's rollout of the new algorithm. Additionally, Meta is accused of creating a competing product, Instagram Boomerang, which reportedly copied Phhhoto’s technology. Phhhoto's appeal highlighted concerns over 'fraudulent concealment' of Meta's actions, asserting that it only became aware of the alleged anti-competitive conduct after uncovering internal documents related to a program named Project Amplify in December 2018. The program allegedly allowed Meta to manipulate content distribution for its benefit. The appellate court's ruling did not evaluate the substantive claims of the lawsuit but rather focused on the appropriateness of the previous dismissal, ultimately indicating that Phhhoto's arguments warranted a court hearing. Meanwhile, a spokesperson for Meta has continuously labeled the lawsuit as unfounded and has reaffirmed the company’s intention to defend itself vigorously against the claims. This ongoing legal battle raises significant questions regarding the competitive practices of large tech firms and their potential impact on smaller startups. It underscores the broader issues surrounding antitrust laws in the digital age, particularly considering how established platforms may leverage their market position to stifle competition and innovation among emerging social apps.