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`UNITED STATES DISTRICT COURT
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`NORTHERN DISTRICT OF CALIFORNIA
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`MAXIMILIAN KLEIN, et al.,
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`Plaintiffs,
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`v.
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`META PLATFORMS, INC.,
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`Defendant.
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`Case No. 3:20-cv-08570-JD
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`ORDER RE MOTION TO DISMISS
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`This case features two groups of plaintiffs who allege antitrust injuries caused by
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`defendant Meta Platforms, Inc. (Meta), which was rebranded from Facebook, Inc. The allegations
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`in the complaints are directed at the Facebook social networking service, and the Court will use
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`Facebook for clarity. One plaintiff group consists of Facebook users, who call themselves
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`“consumers.” They allege that Facebook illegally acquired and maintained “a stranglehold on the
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`Social Network and Social Media Markets.” Dkt. No. 87 ¶ 3 (consolidated consumer class action
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`complaint). The consumer complaint is not in issue for present purposes.
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`The focus here is on the other plaintiff group, namely individuals and entities who bought
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`advertising on Facebook. They allege that they paid artificially inflated ad prices as a result of
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`Facebook’s illegal monopolization of “the market for social advertising.” Dkt. No. 391 ¶ 1 (first
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`amended consolidated advertiser class action complaint) (FAC).1 They allege three claims:
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`monopolization and attempted monopolization in violation of Section 2 of the Sherman Act, 15
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`1 The advertisers’ complaint has a rather tortured ECF docket history because the advertisers filed
`a redacted version that the Court determined was overdone. The first amended consolidated
`advertiser complaint was originally filed at Dkt. No. 237. The Court rejected the overbroad
`redactions. Dkt. No. 344. A revised first amended complaint was refiled pursuant to the order at
`Dkt. No. 353-1. Dkt. No. 391 is a separate ECF entry for No. 353-1, and is the operative
`complaint for the advertiser group.
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`Case 3:20-cv-08570-JD Document 396 Filed 12/06/22 Page 2 of 4
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`U.S.C. § 2, and an unlawful restraint of trade in violation of Section 1 of the Sherman Act, 15
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`U.S.C. § 1. Id. ¶¶ 857-79.
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`A prior district judge who presided over this litigation granted and denied in part
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`Facebook’s motion to dismiss the advertiser and consumer complaints under Federal Rule of Civil
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`Procedure 12(b)(6). Dkt. No. 214. Each plaintiff group was granted leave to amend. Only the
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`advertiser group elected to file an amended complaint, which is the FAC. Facebook asks to
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`dismiss the FAC under Rule 12(b)(6). Dkt. No. 395.2 The parties’ familiarity with the record is
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`assumed, and the motion is denied.
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`The parties have resolved most of Facebook’s objections to the timeliness of the Section 2
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`claims. Facebook read the FAC to continue to challenge: (1) the acquisitions of Instagram and
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`WhatsApp in 2012 and 2014, respectively; (2) the use of Onavo starting in 2011; and (3) changes
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`to Facebook’s Platform policies in 2015, along with data sharing agreements that followed those
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`policy changes. Dkt. No. 395 at 5. Facebook suggested that conduct preceding December 2016
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`would be untimely under the applicable four-year statute of limitations, 15 U.S.C. § 15b, given
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`that the advertisers’ original complaint was filed on December 18, 2020. See Affilious, Inc. v.
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`Facebook, Inc., No. 3:20-cv-09217-JD, Dkt. No. 1. In response, the advertisers stated that they
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`will not seek damages for, or otherwise base their Section 2 claims on, “any pre-limitations period
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`conduct.” Dkt. No. 392 at 15. Facebook has no substantive concerns about this representation,
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`see Dkt. No. 283 at 1, and the advertisers will be held to it.
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`The sole remaining timeliness question relates to the filing of the amended complaint.
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`Facebook says that the FAC, which was filed on February 28, 2022, presents new allegations that
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`“do not relate back to the conduct, transaction, or occurrence set out” in the initial complaint. Dkt.
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`No. 395 at 8 (internal quotation and citation omitted). Consequently, Facebook suggests that
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`February 28, 2018, forward is the relevant time period, and that conduct preceding this date should
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`be disregarded and the FAC trimmed or dismissed.
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`2 The motion to dismiss has its own convoluted history from overbroad redactions. The motion
`and opposition were filed with redactions. Dkt. Nos. 262, 271. The Court directed the parties to
`file unredacted versions of the motion to dismiss briefing. Dkt. No. 344. The citations here are to
`the unredacted versions, Dkt. Nos. 395 (motion), 392 (opposition).
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`Northern District of California
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`United States District Court
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`Case 3:20-cv-08570-JD Document 396 Filed 12/06/22 Page 3 of 4
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`The point is not well taken. The amended complaint responded to the shortfalls identified
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`in the order of dismissal. If anything, the new allegations simply add detail to the prior ones; they
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`are not radical changes or entirely new topics. The new allegations arise out of the same conduct
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`stated in the original complaint, and Facebook has not demonstrated that a relation back will
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`unfairly prejudice it in any way. Consequently, they relate back to the date of the original
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`complaint for limitations purposes. See Fed. R. Civ. P. 15(c); Bebault v. DMG Mori USA, Inc.,
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`No. 18-cv-02373-JD, 2020 WL 2065646, at *3 (N.D. Cal. Apr. 29, 2020); see also ASARCO, LLC
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`v. Union Pac. R.R. Co., 765 F.3d 999, 1004 (9th Cir. 2014) (“The relation back doctrine of Rule
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`15(c) is liberally applied.”) (internal quotation and citation omitted).
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`Facebook also challenges the Section 2 claims as failing to “plausibly allege any
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`cognizable anticompetitive effect from the challenged conduct, let alone one that caused them
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`antitrust injury.” Dkt. No. 395 at 9. These are elements of a Section 2 claim. See In re Google
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`Play Store Antitrust Litig., No. 21-md-02981-JD, 2022 WL 17252587, at *8 (N.D. Cal. Nov. 28,
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`2022) (to state a Section 2 claim, plaintiffs must show “(a) [Facebook’s] possession of monopoly
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`power in the relevant market; (b) the willful acquisition or maintenance of that power; and (c)
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`causal antitrust injury”) (quoting FTC v. Qualcomm Inc., 969 F.3d 974, 990 (9th Cir. 2020)).
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`This too is unavailing. The FAC describes a “monopoly broth” of anticompetitive
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`conduct, which the prior district judge sustained as a plausible approach. See Dkt. No. 214 at 71
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`(“Under a ‘monopoly broth’ theory of liability, a plaintiff ‘can state a Section 2 claim by alleging a
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`series of practices that are anticompetitive, even if some of the activities would be lawful if
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`viewed in isolation.’”) (citation omitted). The ingredients of the broth are said to be: (1) the
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`targeting of competitors for whitelist and data sharing agreements “on pain of denial of access to
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`Facebook’s Platform and APIs”; (2) entering into unlawful data and market division agreements
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`with Netflix, eBay, and Foursquare; (3) using data that was deceptively obtained through the
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`Onavo app to surveil and target competition; (4) integrating artificial intelligence and machine
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`learning models from Facebook, Instagram, and WhatsApp; and (5) entering into an agreement
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`with Google to reinforce Facebook’s position in the social advertising market. Dkt. No.
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`391 ¶¶ 860, 866.
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`3
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`Northern District of California
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`United States District Court
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`Case 3:20-cv-08570-JD Document 396 Filed 12/06/22 Page 4 of 4
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`This is enough to go forward. The advertisers have plausibly alleged “predatory and
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`exclusionary conduct” that caused the social advertising market to be less competitive.
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`Qualcomm, 969 F.3d at 990. This is said to have “resulted in fewer Social Advertising choices for
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`advertisers and left only Facebook’s monopoly rents as available prices in the” market. Dkt. No.
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`391 ¶ 825; see also id. ¶ 835 (advertisers paid “supracompetitive prices inflated by Facebook’s
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`anticompetitive scheme”). Facebook’s contentions to the contrary raise factual disputes that are
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`not amenable to resolution in a motion to dismiss.
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`As a closing point, Facebook says that plaintiffs Affilious, Inc., Jessyca Frederick, and 406
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`Property Services, PLLC, lack Article III standing to bring the Section 1 claim alleged in Count
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`III. Dkt. No. 395 at 15. The claim is based on an agreement Facebook entered with Google,
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`codenamed “Jedi Blue,” in September 2018. Dkt. No. 391 ¶¶ 645-47. By the advertisers’ own
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`class definition, Jedi Blue could not have injured the pre-2018 named plaintiffs, “who purchased
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`advertising from Facebook between December 1, 2016, and April 3, 2018, but not after April 3,
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`2018.” Id. ¶ 839.
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`The Court declines to resolve the question at this stage of the case. Facebook may ask to
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`revisit it if a fully developed record so warrants. The same goes for plaintiff Mark Young. See
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`Dkt. No. 395 at 15 n.9.
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`IT IS SO ORDERED.
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`Dated: December 6, 2022
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`JAMES DONATO
`United States District Judge
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`Northern District of California
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`United States District Court
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