Case 5:21-cv-00337-LHK Document 1 Filed 01/13/21 Page 1 of 56
`
`Keith J. Verrier (pro hac vice forthcoming)
`Austin B. Cohen (pro hac vice forthcoming)
`LEVIN SEDRAN & BERMAN LLP
`510 Walnut Street, Suite 500
`Philadelphia, PA 19106-3997
`Telephone: (215) 592-1500
`Facsimile: (215) 592-4663
`kverrier@lfsblaw.com
`acohen@lfsblaw.com
`
`Christina “Dena” C. Sharp (State Bar No. 245869)
`Jordan Elias (State Bar No. 228731)
`Adam E. Polk (State Bar No. 273000)
`Scott M. Grzenczyk (State Bar No. 279309)
`GIRARD SHARP LLP
`601 California Street, Suite 1400
`San Francisco, CA 94108
`Tel: (415) 981-4800
`Fax: (415) 981-4846
`dsharp@girardsharp.com
`jelias@girardsharp.com
`apolk@girardsharp.com
`scottg@girardsharp.com
`
`Attorneys for Plaintiff and the Proposed Class
`
`UNITED STATES DISTRICT COURT
`NORTHERN DISTRICT OF CALIFORNIA
`SAN JOSE DIVISION
`
`
`Case No.
`
`CLASS ACTION COMPLAINT
`
`
`
`DEMAND FOR JURY TRIAL
`
`
`
`
`
`
`
` )
`
`
`)
`)
`)
`)
`)
`)
`)
`)
`)
`)
`)
`)
`)
`)
`
`JESSICA L. LAYSER, individually and
`on behalf of all others similarly situated,
`
`
`Plaintiff,
`
`
`
`v.
`
`
`FACEBOOK, INC., a Delaware
`corporation headquartered in California,
`
`
`Defendant.
`
`
`
`
`
`
`
`
`
`
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`CLASS ACTION COMPLAINT
`CASE NO.
`
`

`

`Case 5:21-cv-00337-LHK Document 1 Filed 01/13/21 Page 2 of 56
`
`TABLE OF CONTENTS
`
`B. 
`C. 
`
`D. 
`
`NATURE OF THE CASE .........................................................................................................1 
`PARTIES
`............................................................................................................................2 
`JURISDICTION AND VENUE ................................................................................................3 
`BACKGROUND .......................................................................................................................3 
`A. 
`Social Networking. ........................................................................................................3 
`B. 
`Facebook. .......................................................................................................................4 
`C. 
`Social Advertising. .........................................................................................................5 
`D. 
`Facebook’s Use of Data to Maximize Advertising Value. ............................................6 
`RELEVANT MARKETS AND MONOPOLY POWER ..........................................................8 
`A. 
`The Social Network Market. ..........................................................................................8 
`B. 
`Facebook Has Monopoly Power in the Social Network Market. ................................12 
`C. 
`The Social Advertising Market. ...................................................................................16 
`D. 
`Facebook Has Monopoly Power in the Social Advertising Market. ...........................20 
`ANTICOMPETITIVE CONDUCT .........................................................................................21 
`Facebook Originally Gained Its Market Share Over Other Social Networks by
`A. 
`Deceiving Consumers About Its Privacy Policies. ......................................................21 
`Facebook Misuses Consumer Data to Identify Competitive Threats. .........................23 
`Facebook Maintained Its Monopoly by Acquiring Burgeoning Competitive Threats.26 
`1. 
`The Instagram Acquisition Neutralized a Competitive Threat. .......................27 
`2. 
`The WhatsApp Acquisition Neutralized a Competitive Threat. ......................31 
`Facebook Limited Access to Its Platform to Deter Competition and Maintain Its
`Monopoly. ....................................................................................................................36 
`Facebook’s Anticompetitive Conditions on Platform Access Required
`1. 
`Developers Not to Work with Competitors. ....................................................38 
`Facebook’s Enforcement of its Anticompetitive Conditions Deterred
`Emerging Threats. ............................................................................................41 
`Facebook’s Misconduct Becomes Public. ...................................................................43 
`
`2. 
`
`E. 
`
`
`
`
`I. 
`II. 
`III. 
`IV. 
`
`V. 
`
`VI. 
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`CLASS ACTION COMPLAINT
`CASE NO.
`
`

`

`Case 5:21-cv-00337-LHK Document 1 Filed 01/13/21 Page 3 of 56
`
`
`
`VII.  HARM TO COMPETITION ...................................................................................................44 
`VIII.  CLASS ACTION ALLEGATIONS ........................................................................................45 
`IX. 
`FRAUDULENT CONCEALMENT AND TOLLING ............................................................48 
`X. 
`INTERSTATE TRADE AND COMMERCE .........................................................................49 
`XI. 
`VIOLATIONS ALLEGED ......................................................................................................50
`COUNT I - Violation of Section 2 of the Sherman Act (15 U.S.C. § 2)
`Monopolization ........................................................................................................................52 
`COUNT II - Violation of Section 2 of the Sherman Act (15 U.S.C. § 2)
`Attempted Monopolization ......................................................................................................52 
`PRAYER FOR RELIEF ..........................................................................................................52 
`XII. 
`JURY TRIAL DEMANDED ...............................................................................................................53
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`CLASS ACTION COMPLAINT
`CASE NO.
`
`

`

`Case 5:21-cv-00337-LHK Document 1 Filed 01/13/21 Page 4 of 56
`
`
`
`Plaintiff Jessica L. Layser, by and through undersigned counsel, hereby brings this action
`against Defendant Facebook, Inc. (“Facebook”), on behalf of herself and all others similarly situated,
`and alleges as follows:
`I.
`NATURE OF THE CASE
`1.
`Facebook is the dominant online social network in the United States and in the world.
`Initially, Facebook used its false promises of data security and privacy protections to overtake its early
`rivals and become the dominant force in the market for person social networking. As it recognized,
`once it won the initial battle for supremacy, its foothold in social networking would be protected. In
`particular, because a personal social network is generally more valuable to a user when more of that
`user’s friends and family are already members, a new entrant faces significant difficulties in attracting a
`sufficient user base to compete with Facebook.
`2.
`Facebook holds monopoly power in the market for personal social networking services
`in the United States, which it enjoys primarily through its control of the largest and most profitable
`social network in the world. Facebook monetizes its personal social networking monopoly principally
`by selling advertising, which exploits a rich set of data about users’ activities, interests, and affiliations
`to target advertisements to users. Facebook in fact specializes in selling social advertising, a unique
`market for advertising built around the very specialized and granular data that Facebook is able to
`collect on its users and their contacts in light of its monopoly in the personal social networking space.
`3.
`Social advertising allows Facebook to identify the perfectly targeted audience for any
`potential advertiser’s product and then evaluate the results of those advertisements based upon very
`specific user data regarding how each user interacted with the advertisement. That allows addition
`refinements and enhancements to the advertisement itself as well as the target audience. Because
`Facebook is unique in the level of social data that it can gather, it has a firm hold on the market for
`social advertising and has been able to monetize its product to a staggering degree. Last year alone,
`Facebook generated advertising revenue of more than $70 billion and profits of more than $18.5
`billion.
`4.
`With that much at stake, Facebook has adopted numerous anticompetitive practices to
`preserve its monopoly in social networking and consequently in social advertising. The company has,
`1
`CLASS ACTION COMPLAINT
`CASE NO.
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`

`

`Case 5:21-cv-00337-LHK Document 1 Filed 01/13/21 Page 5 of 56
`
`
`
`for many years, continued to engage in a course of anticompetitive conduct with the aim of
`suppressing, neutralizing, and deterring serious competitive threats to Facebook. That conduct has
`included, among other things, utilizing data from third parties to identify burgeoning competitive
`threats, acquiring potential competitors before they can actually compete, and utilizing anticompetitive
`terms and practices with respect to application programming interfaces (“APIs”) that are made
`available to third-party software applications. Among other things, Facebook used its APIs to gather
`data from which it could assess potential threats and then punished and suppressed some promising
`threats (e.g., Path, Circle, and various messaging apps) while preventing and deterring others from even
`becoming threats in the first place. These anticompetitive practices allowed Facebook to acquire and
`maintain monopoly power in the market for personal social networking and the market for social
`advertising.
`5.
`As a result of this anticompetitive conduct, Plaintiff and members of the Class were
`forced to pay supra-competitive prices for advertisements they purchased directly from Facebook.
`II.
`PARTIES
`6.
`Plaintiff Jessica L. Layser (“Layser”) is a realtor with her principal place of business in
`Langhorne, Pennsylvania. During the Class Period, Plaintiff Layser purchased advertising directly
`from Facebook.
`7.
`Defendant Facebook is a publicly traded, for-profit company, incorporated in Delaware
`and with its principal place of business at 1601 Willow Road, Menlo Park, CA 94025.
`8.
`Facebook is a social media company that provides online services to more than 3.14
`billion users. Facebook owns and operates several business divisions, such as:
`Facebook. Facebook’s core social media application, which bears the company’s name,
`
`is, according to Facebook’s filings with shareholders, designed to enable “people to
`connect, share, discover, and communicate with each other on mobile devices and
`personal computers.” The Facebook core product contains a “News Feed” that displays
`an algorithmically ranked series of content and advertisements individualized for each
`person.
`Instagram. Instagram is a social media photo-sharing application that allows users to
`2
`CLASS ACTION COMPLAINT
`CASE NO.
`
`
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`

`

`Case 5:21-cv-00337-LHK Document 1 Filed 01/13/21 Page 6 of 56
`
`
`
`III.
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`
`
`
`
`share photos, videos, and messages on mobile devices. Facebook acquired Instagram in
`April 2012.
`Messenger. Facebook’s Messenger application is a multimedia messaging application,
`allowing messages that include photos and videos to be sent from person to person
`across platforms and devices.
`WhatsApp. WhatsApp is a secure messaging application used by individuals and
`businesses. Facebook acquired WhatsApp in 2014.
`JURISDICTION AND VENUE
`9.
`This Court has subject matter jurisdiction over the Plaintiffs’ federal antitrust claims,
`brought under Section 2 of the Sherman Act, 15 U.S.C. § 2, and Sections 4 and 16 of the Clayton Act,
`15 U.S.C. §§ 15 & 26, pursuant to 28 U.S.C. §§ 1331 & 1337.
`10.
`The Court has personal jurisdiction over Facebook because (1) Facebook is subject to
`general jurisdiction in the State of California, where it maintains its headquarters and principal place of
`business, (2) Facebook transacted business in the State of California, including in this District, during
`the Relevant Time Period; (3) Facebook had substantial contacts with the State of California, including
`in this District, during the Relevant Time Period; and (4) the claims brought in this lawsuit arise out of
`actions taken by Facebook in the State of California, including actions taken in this District.
`11.
`Venue is proper in this District under 15 U.S.C. § 15(a), 15 U.S.C. § 22, and 28 U.S.C. §
`1391. Defendant Facebook resides and transacts business in this District; and the claims brought in this
`lawsuit arise out of events or omissions that occurred, in substantial part, in this District.
`12.
`This action is properly assigned to the San Jose Division of this District, pursuant to
`Civil Local Rules 3-2(c) and (e), because Facebook is headquartered, and a substantial part of the
`events or omissions that give rise to the claim occurred, in San Mateo County, which is served by the
`San Jose Division.
`IV.
`BACKGROUND
`A.
`Social Networking.
`13.
`In the early 2000s, the widespread use of personal computers enabled a new way of
`connecting and communicating with other people online: social networking with friends and family.
`3
`CLASS ACTION COMPLAINT
`CASE NO.
`
`

`

`Case 5:21-cv-00337-LHK Document 1 Filed 01/13/21 Page 7 of 56
`
`
`
`Friendster, launched in March 2003, was one of the first personal social networks to gain significant
`popularity, and Myspace followed soon after. Half a year later, in February 2004, Mark Zuckerberg and
`his Harvard College classmates launched Facebook (then styled “TheFacebook”).
`14.
`In contrast to the limited functionalities of email and messaging, personal social
`networking gained popularity by providing a distinct and richer way for people to maintain personal
`connections. Personal social networking enables people to stay up to date and share personal content
`with friends and family, and has become an integral part of the daily lives of millions of Americans.
`15.
`Through an account on a personal social network, users can post content about their own
`lives and interests, and view what their personal connections have posted. In doing so, they can stay up
`to date about the lives of people they care about. During a single session, a person can read about one
`friend’s recent vacation, another friend’s thoughts on a local restaurant, and a relative’s wedding
`announcement. The person can also post their own content, and interact with their friends’ posts
`through comments, replies, and reactions. Thus, personal social networking gives people a personalized
`social space in which they can share content with their personal connections.
`16.
`At a high level, the participants in the social media industry include the following: social
`media platforms (who run social networks), consumers, advertisers, and content providers (which can
`be any of the previous three types of market participants, or can be third parties).
`17.
`Typically, social media companies do not charge consumers money for using their social
`networking services. Instead, social media platforms monetize the vast amounts of data they are able to
`obtain from users through the innumerable interactions occurring in the network.
`B.
`Facebook.
`18.
`Facebook launched first on college campuses, but within a few years it had expanded to
`the general public. Soon after that, Facebook surpassed both Friendster and Myspace, presenting itself
`as a more premium, private, and personal social networking experience. By 2009, Facebook had
`established itself as the most popular personal social networking provider in the United States and the
`world. Since that time, Facebook has remained the number one provider of personal social networking
`in the United States and the world.
`19.
`Facebook’s core offering to consumers is access to its social media network, which
`4
`CLASS ACTION COMPLAINT
`CASE NO.
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`

`

`Case 5:21-cv-00337-LHK Document 1 Filed 01/13/21 Page 8 of 56
`
`
`
`contains the individualized profiles of well over 200 million users in the United States and billions of
`users worldwide. In exchange for access to the only social media network that allows consumers to
`connect online with most of their family, friends, and acquaintances, Facebook requires users to
`provide their personal data and receive targeted advertisements.
`C.
`Social Advertising.
`20.
`Social advertising is distinct from other forms of advertising, including other forms of
`display advertising, search advertising, and “offline” advertising (e.g., television, radio, and print).
`21.
`Social advertising is a distinctive form of display advertising. Display advertising refers
`to the display of advertisements—in the form of images, text, or videos—on websites or apps when a
`user visits or uses them. Display advertising is distinct from “offline” advertising, such as TV, radio,
`and print advertising, because it offers the ability to reach consumers during their online activity
`(including during their use of mobile devices like smartphones and tablets), allows for interactive ads,
`and permits rich ad targeting to users using personal data generated and collected through their online
`activity. Display advertising is also distinct from search advertising, which is a form of digital
`advertising that is shown to a person when he or she enters a specific search term in an online search
`engine, like Google or Bing. Advertisers buy search advertising to target consumers who are actively
`inquiring about a particular type of product or service. By contrast, display advertising reaches
`consumers who are not actively querying a search engine, including consumers who may be further
`from making a specific purchase decision.
`22.
`Social advertising is a type of display advertising, but it is distinct in several ways from
`the non-social display advertising on websites and apps that are not personal social networks. For
`example, in part because users must log in to a personal social network with unique user credentials,
`social advertising enables advertisers to target users based on personalized data regarding users’
`personal connections, activities, identity, demographics, interests, and hobbies. Also, in contrast to
`display advertising on other websites and apps, social advertising leverages high engagement and
`frequent contact with users, as well as the integration of advertisements directly into a user’s feed of
`content generated by personal connections (including ads that resemble “native” content and boosted
`content). Social advertising also facilitates forms of engagement with the advertisement that are not
`5
`CLASS ACTION COMPLAINT
`CASE NO.
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`

`

`Case 5:21-cv-00337-LHK Document 1 Filed 01/13/21 Page 9 of 56
`
`
`
`available with other forms of display advertising— such as allowing a user to share an advertisement
`with a personal connection, or to “like” or follow an advertiser’s page. Among other things, the
`foregoing characteristics enable social advertising providers to sell advertisers access to personally
`targeted “audiences” of highly engaged users, and to reach users who need not be actively searching
`for—or even aware of—the advertised product or service.
`23.
`As Facebook’s Chief Operating Officer (“COO”) Sheryl Sandberg stated in a 2012
`earnings call: “[O]n the question of where advertisers are, you know as I’ve said before, we are a third
`thing. We’re not TV, we’re not search. We are social advertising.”
`D.
`Facebook’s Use of Data to Maximize Advertising Value.
`24.
`Facebook has a preeminent ability to target users with advertising due to its scale, its
`high level of user engagement, and its ability to track users both on and off Facebook properties.
`25.
`Facebook characterizes each user’s disclosure of his or her identity as increasing the
`value of the experience for all users, who are purportedly able to benefit from others’ disclosures by
`connecting with and following the activities of their real-world connections. In reality, disclosure
`increases the market value of the information Facebook obtains from its users. Knowing the internet
`habits of any generic user is less valuable than knowing the browsing habits of a specific individual
`whose identity can be linked with information about their shopping habits, income, family, friends,
`travel, dining, dating, and a myriad of other data points.
`26.
`In the years since its inception, Facebook has tracked trillions of data points about
`consumers with a powerful data structure that it calls the “social graph.” The social graph concept
`“refers to Facebook’s ability to collect, express, and leverage the connections between the site’s users,
`or as some describe it, ‘the global mapping of everyone and how they’re related.’”1 All of the data on
`Facebook can be thought of as a “node” or “endpoint” that is connected to other data on Facebook:
`
`
`
`
`1 See John Gallaugher, Getting the Most Out of Information Systems § 8.3 (quoting A. Iskold, “Social
`Graph: Concepts
`and
`Issues,” ReadWriteWeb, September
`12,
`2007),
`at
`available
`https://2012books.lardbucket.org/books/getting-the-most-out-of-information-systems-v1.4/s12-
`facebook-building-a-business-f.html (last accessed December 30, 2020).
`6
`CLASS ACTION COMPLAINT
`CASE NO.
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`

`

`Case 5:21-cv-00337-LHK Document 1 Filed 01/13/21 Page 10 of 56
`
`
`
`You’re connected to other users (your friends), photos about you are tagged,
`comments you’ve posted carry your name, you’re a member of groups, you’re
`connected to applications you’ve installed—Facebook links them all.2
`27.
`Given Facebook’s size and reach, as well as the extent of its surreptitious user data
`collection, the social graph is a unique and uniquely valuable dataset, even among the giants of the tech
`world. Much of this value stems from the fact that Facebook’s social graph mostly cannot be viewed by
`the public or search engines, and contains extraordinary amounts of data that users unwittingly
`provided Facebook regarding their most minute everyday habits.
`28.
`The personal data of Facebook’s users take many forms including data about the
`information users share on their personal profile pages, the photos and profiles users have viewed, what
`information users share with others, and even what users put in messages to other users. This granular
`data allows the targeting of users on a scale that has never before existed.
`29.
`That data can be, and is, monetized by commercializing access—for example, by
`providing application developers, content generators, and advertisers with direct access to the
`information embedded in Facebook’s network, such as the interconnection between users, user
`attributes, and user behavior. Facebook is a so-called “walled garden”—a closed ecosystem run by a
`single operator. Advertisers must go through Facebook in order to reach Facebook users. And
`Facebook can decide how much of its social graph it allows app developers to access.
`30.
`Facebook’s platform allows advertisers to target Facebook’s users by their attributes and
`behavior. Facebook’s machine-learning algorithms mine patterns in the user data for advertisers which
`allows those advertisers to reach precisely the right audience to convert into sales, user signups, or the
`generation of sales leads.
`31.
`Facebook has recognized the unique characteristics of the advertising that a personal
`social network can offer. In earnings calls, Facebook COO Ms. Sandberg described Facebook as the
`“world’s first global platform that lets marketers personalize their messages at unprecedented scale,”
`
`
`2 Id. (citing A. Zeichick, “How Facebook Works,” Technology Review, July/August 2008).
`
`
`7
`CLASS ACTION COMPLAINT
`CASE NO.
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`

`

`Case 5:21-cv-00337-LHK Document 1 Filed 01/13/21 Page 11 of 56
`
`
`
`and called Facebook and Instagram the “two most important mobile advertising platforms” in the
`world.
`
`32.
`Facebook’s social advertising business, serving ads to users of its personal social
`networks reflecting its vast access to data, is extraordinarily profitable. According to its public earnings
`reports, Facebook earns “substantially all of [its] revenue from selling advertising placements to
`marketers”. Facebook’s advertising revenue in 2019 was nearly $70 billion.
`V.
`RELEVANT MARKETS AND MONOPOLY POWER
`33.
`There are two markets applicable to this dispute. They are: (1) “the Social Network
`Market”; and (2) “the Social Advertising Market.” Facebook has unlawfully acquired and maintained
`monopoly power in both markets.
`A.
`The Social Network Market.
`34.
`The Social Network Market is the product market consisting of personal social
`networks, which are websites (and accompanying mobile applications) that: (1) facilitate users of a
`given network finding, interacting, and networking with other people either whom the users already
`know or to whom they are connected through others they already know online; and (2) provide users
`with additional substantive features beyond the ability to communicate with other users and share
`multimedia.
`35.
`Three key elements distinguish the Social Network Market from other forms of social
`media or other online services provided to users.
`36.
`First, personal social networks are built on a social graph that maps the connections
`between users and their friends, family, and other personal connections. The social graph forms the
`foundation upon which users connect and communicate with their personal connections, and can reflect
`friendships, online conversations, a desire to see someone’s updates, visits to places, and other shared
`connections to personal interests and activities, including groups, locations, businesses, artists, and
`hobbies. Personal social network providers use the social graph as the backbone for the features they
`offer users, including the two other key elements of personal social networking discussed below.
`37.
`Second, personal social networks include features that many users regularly employ to
`interact with personal connections and share their personal experiences in a shared social space,
`8
`CLASS ACTION COMPLAINT
`CASE NO.
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`

`

`Case 5:21-cv-00337-LHK Document 1 Filed 01/13/21 Page 12 of 56
`
`
`
`including in a one-to-many “broadcast” format. In this shared social space, which may include a news
`feed or other similar feature, users share content—such as personal updates, interests, photos, news,
`and videos—with their personal connections. Personal social network providers can use the social
`graph to inform what content they display to users in the shared social space and when. This generally
`applies to all forms of content on social networks, including user-created content like user “news feed”
`posts, publisher-created content like news articles, and advertisements.
`38.
`Third, personal social networks include features that allow users to find and connect
`with other users, to make it easier for each user to build and expand their set of personal connections.
`The social graph also supports this feature by informing which connections are suggested or available
`to users.
`39. While users may engage with other websites and apps, other types of internet services
`are not adequate substitutes for personal social networks.
`40.
`Personal social networks are distinct from, and not reasonably interchangeable with,
`specialized social networking services like those that focus on professional (e.g., LinkedIn) or interest-
`based (e.g., Strava) connections. Specialized networks are designed and used primarily for sharing a
`narrow and highly specialized category of content with a narrow and highly specialized set of users for
`a narrow and distinct set of purposes.
`41.
`Personal social networking also is distinct from, and not reasonably interchangeable
`with, online video or audio consumption-focused services such as YouTube, Spotify, Netflix, and Hulu.
`Users employ such services primarily for the passive consumption and posting of specific media
`content (e.g., videos or music) from and to a wide audience of often unknown users. These services are
`not used primarily to communicate with friends, family, and other personal connections.
`42.
`Additionally, personal social networking is distinct from, and not reasonably
`interchangeable with, mobile messaging services. Mobile messaging services do not feature a shared
`social space in which users can interact, and do not rely upon a social graph that supports users in
`making connections and sharing experiences with friends and family. Indeed, users of mobile
`messaging services generally do not and cannot query a mobile messaging service to find contact
`information they do not already possess, nor can they query the service to find other users connected to
`9
`CLASS ACTION COMPLAINT
`CASE NO.
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`

`

`Case 5:21-cv-00337-LHK Document 1 Filed 01/13/21 Page 13 of 56
`
`
`
`the people, places, things, and interests that matter to them. Instead, users of mobile messaging services
`employ those services primarily to send communications to a small and discrete set of people generally
`limited to a set of contacts entered by each user. Zuckerberg described this distinction in a 2019 post,
`calling personal social networking providers like Facebook “the digital equivalent of a town square,”
`and contrasting the private communication offered by mobile messaging apps like WhatsApp as “the
`digital equivalent of the living room.”
`43.
`Search engines, such as Google, Yahoo, or Bing, are not “social networks” because they
`do not provide for interaction between platform members. Similarly, apps like Apple’s “iMessage,”
`which simply allow the sharing of messaging media, such as emails or text messages, are not social
`networks because, although they provide for interaction, they do so only in a device-to-device manner
`and focus solely on delivering messages rather than facilitating a broader online social experience.
`Facebook itself has noted this distinction, explaining in documents provided to the House Antitrust
`Subcommittee that whereas the growth of Apple’s iMessage is “limited by the adoption of iPhones, . . .
`Facebook’s products can be used across devices.”3
`44.
`There are no reasonable substitutes for personal social networks. Social media
`platforms, such as YouTube and TikTok, primarily exist to allow users to stream, share, and view
`content. By contrast, firms in the Social Network Market provide users of a particular network an
`online community that brings together users who specifically choose to associate with one another. In
`addition, Social Networks, such as Facebook, provide a “rich social experience” to users through
`unique product features.4 Social Media platforms, like YouTube and TikTok, do not provide or
`facilitate a similar use and instead offer only limited opportunities for social interaction, or interaction
`of a very different type that complements, rather than substitutes, for a social networking experience.
`45.
`Beyond the “rich social experience” that personal social networks provide to users,
`
`
`3 See Investigation of Competition in Digital Markets, Majority Staff Report and Recommendations
`(“House Report”), Subcommittee on Antitrust, Commercial, and Administrative Law of the Committee
`on the Judiciary, at 136 n.752 (Oct. 4, 2020), available at
`https://judiciary.house.gov/uploadedfiles/competition_in_digital_markets.pdf.
`4 Id. at 91.
`
`10
`CLASS ACTION COMPLAINT
`CASE NO.
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`

`

`Case 5:21-cv-00337-LHK Document 1 Filed 01/13/21 Page 14 of 56
`
`
`
`consumers also use personal social networks differently than other social media platforms. Social
`networks “facilitate their users finding, interacting, and networking with other people they already
`know online,” whereas the broader category of “soc