Judge Rejects Antitrust Claims Against Facebook

     SAN DIEGO (CN) – A federal court has thrown out claims that a Facebook organized group boycott gave it a monopoly on social network advertising.
     Last week, U.S. District Court Judge Cathy Ann Bencivengo dismissed Sambreel Holdings’ lawsuit against Facebook for failure to state a claim, denying its motion for a preliminary injunction and granting Facebook’s motion to dismiss.
     Facebook had gone to war over the sale of Sambreel’s Internet display ads through the web browser add-on platform Yontoo, the Carlsbad-based company claimed earlier this year.
     The company offered the platform through a product called PageRage, which allowed users to alter the appearance of their Facebook pages.
     As Sambreel grew in popularity, Facebook conspired with advertisers to sever ties with PageRage, and threatened to blacklist any company that didn’t, according to the complaint.
     But Judge Bencivengo wasn’t convinced that Facebook had violated any antitrust laws.
     “Facebook has a right to protect the infrastructure it has developed, and the manner in which its website will be viewed,” the judge stated, before digging into the meat and potatoes of Sambreel’s claims.
     She found that Facebook’s terms allowed it to bar advertising partners for doing business with companies it had banned, including Sambreel, and had a “right to determine with whom it will deal and on what terms.”
     “Facebook’s ability to maintain the quality of its product is surely a legitimate justification for maintaining a list of approved advertising partners, and ensuring that such partners adhere to Facebook’s requirements. Moreover, the complaint does not allege facts to support the notion that Facebook has excluded Sambreel or its advertising partners from operating on other social networks,” Bencivengo wrote in her 15-page order.
     The judge noted that the “alleged conspiracy” between Facebook and its partners “only affects the market for Facebook itself,” and did not stop Sambreel from developing its products for other websites or social networks.
     “The complaint does not sufficiently allege that advertising partners are prohibited from advertising with Sambreel outside of Facebook, or that Facebook users are prohibited from viewing Sambreel advertisements or using Sambreel products on other websites,” wrote Bencivengo.
     Facebook allegedly blocked access to users who used PageRage, and demanded that they remove the Yontoo platform before allowing them to log back on. Sambreel called that practice “gating.”
     But the claim failed to pass muster under antitrust law, because Facebook “has a right to dictate the terms on which it will permit its users to take advantage of the Facebook social network,” wrote Bencivengo
     “There is no fundamental right to use Facebook; users may only obtain a Facebook account upon agreement that they will comply with Facebook’s terms, which is unquestionably permissible under the antitrust laws,” the judge wrote. “It follows, therefore, that Facebook is within its rights to require that its users disable certain products before using its website.”
     The judge similarly rejected Sambreel’s monopolization claims, ruling it failed to “allege facts to support a relevant market which Facebook is capable of monopolizing because the alleged conduct implicates only Facebook’s actions to control the content of its own website.”
     Tech blog Gigaom said that Sambreel may have undermined its case, calling it “a decidedly unsympathetic defendant” with a reputation for “hijacking ad spaces,” and offering downloadable software which slows computers.

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