`NOT YET SCHEDULED FOR ORAL ARGUMENT
`PUBLIC COPY—SEALED MATERIAL DELETED
`21-7078
`
`United States Court of Appeals
`for the District of Columbia Circuit
`STATE OF NEW YORK; DISTRICT OF COLUMBIA; STATE OF CALIFORNIA; STATE OF
`COLORADO; STATE OF FLORIDA; STATE OF IOWA; STATE OF NEBRASKA; STATE OF
`NORTH CAROLINA; STATE OF OHIO; STATE OF TENNESSEE; STATE OF ALASKA;
`STATE OF ARIZONA; STATE OF ARKANSAS; STATE OF CONNECTICUT; STATE OF
`DELAWARE; TERRITORY OF GUAM; STATE OF HAWAII; STATE OF IDAHO; STATE OF
`ILLINOIS; STATE OF INDIANA; STATE OF KANSAS; COMMONWEALTH OF KENTUCKY;
`STATE OF LOUISIANA; STATE OF MAINE; STATE OF MARYLAND; COMMONWEALTH OF
`MASSACHUSETTS; STATE OF MICHIGAN; STATE OF MINNESOTA; STATE OF
`MISSISSIPPI; STATE OF MISSOURI; STATE OF MONTANA; STATE OF NEVADA; STATE
`OF NEW HAMPSHIRE; STATE OF NEW JERSEY; STATE OF NEW MEXICO; STATE OF
`NORTH DAKOTA; STATE OF OKLAHOMA; STATE OF OREGON; COMMONWEALTH OF
`PENNSYLVANIA; STATE OF RHODE ISLAND; STATE OF TEXAS; STATE OF UTAH; STATE
`OF VERMONT; COMMONWEALTH OF VIRGINIA; STATE OF WASHINGTON; STATE OF
`WEST VIRGINIA; STATE OF WISCONSIN; AND STATE OF WYOMING,
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`
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`Plaintiffs-Appellants,
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`v.
`FACEBOOK, INC.,
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`
`
`Defendant-Appellee.
`
`On Appeal from the United States District Court
`for the District of Columbia
`
`BRIEF FOR APPELLANTS
`
`
`
`
`BARBARA D. UNDERWOOD
` Solicitor General
`STEVEN C. WU
` Deputy Solicitor General
`PHILIP J. LEVITZ
` Assistant Solicitor General
`
`of Counsel
`(Complete counsel listing appears on signature pages.)
`
`LETITIA JAMES
` Attorney General
` State of New York
`28 Liberty Street
`New York, NY 10005
`philip.levitz@ag.ny.gov
`(212) 416-6325
`
`
`Dated: January 14, 2022
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`
`
`USCA Case #21-7078 Document #1930765 Filed: 01/14/2022 Page 2 of 99
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`CERTIFICATE AS TO PARTIES,
`RULINGS, AND RELATED CASES
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`Pursuant to Circuit Rule 28(a)(1), the undersigned counsel of record
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`certifies as follows:
`
`A. Parties
`The plaintiffs-appellants are the State of New York, District of
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`Columbia, State of California, State of Colorado, State of Florida, State
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`of Iowa, State of Nebraska, State of North Carolina, State of Ohio, State
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`of Tennessee, State of Alaska, State of Arizona, State of Arkansas, State
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`of Connecticut, State of Delaware, Territory of Guam, State of Hawaii,
`
`State of Idaho, State of Illinois, State of Indiana, State of Kansas,
`
`Commonwealth of Kentucky, State of Louisiana, State of Maine, State of
`
`Maryland, Commonwealth of Massachusetts, State of Michigan, State of
`
`Minnesota, State of Mississippi, State of Missouri, State of Montana,
`
`State of Nebraska, State of Nevada, State of New Hampshire, State of
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`New Jersey, State of New Mexico, State of North Dakota, State of Okla-
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`homa, State of Oregon, Commonwealth of Pennsylvania, State of Rhode
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`Island, State of Texas, State of Utah, State of Vermont, Commonwealth
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`Certificate-1
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`
`
`USCA Case #21-7078 Document #1930765 Filed: 01/14/2022 Page 3 of 99
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`of Virginia, State of Washington, State of West Virginia, State of Wiscon-
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`sin, and State of Wyoming.
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`The defendant-appellee is Facebook, Inc. (In October 2021, Facebook,
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`Inc. changed its name to Meta Platforms, Inc.; however, the caption in
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`this case has not been changed.)
`
`The parties and caption in this Court are the same as in the district
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`court.
`
`As of the date of this filing, no amici curiae or intervenors have
`
`appeared in the district court or in this Court.
`
`B. Ruling Under Review
`The ruling under review is the Memorandum Opinion of the Honor-
`
`able James E. Boasberg (ECF No. 137) and accompanying Order (ECF
`
`No. 136), each dated June 28, 2021, which granted defendant-appellee
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`Facebook, Inc.’s motion to dismiss and dismissed this case. The Memo-
`
`randum Opinion and Order do not yet have official reporter citations, but
`
`the Memorandum Opinion is available on electronic databases, New York
`
`v. Facebook, Inc., No. 20-cv-3589, 2021 WL 2643724 (D.D.C. June 28, 2021).
`
`Certificate-2
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`
`
`USCA Case #21-7078 Document #1930765 Filed: 01/14/2022 Page 4 of 99
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`
`C. Related Cases
`This case has not previously been before this Court or any other
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`court. There is one related case, FTC v. Facebook, Inc., No. 20-cv-3590,
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`pending in the U.S. District Court for the District of Columbia, although
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`the state plaintiffs in this case are not parties to the FTC’s case. The FTC’s
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`case has not previously been before this Court or any court other than
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`the U.S. District Court for the District of Columbia.
`
`Certificate-3
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`
`
`USCA Case #21-7078 Document #1930765 Filed: 01/14/2022 Page 5 of 99
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`TABLE OF CONTENTS
`
`Page
`TABLE OF AUTHORITIES ................................................................... ..iv
`GLOSSARY ............................................................................................... x
`PRELIMINARY STATEMENT ................................................................. 1
`JURISDICTIONAL STATEMENT ........................................................... 4
`ISSUES PRESENTED .............................................................................. 4
`PERTINENT STATUTES ......................................................................... 5
`STATEMENT OF THE CASE .................................................................. 5
`A. Factual Background .................................................................. 5
`1. The market for personal social networking services ........ 5
`2. Facebook’s dominance of the market for personal
`social networking services ................................................. 6
`3. Facebook’s ongoing efforts to “buy or bury”
`potential competitors ......................................................... 7
`a. Acquisitions to “buy” nascent competitors ................. 8
`i.
`Instagram ............................................................ 9
`ii. WhatsApp .......................................................... 10
`iii. Other acquisitions ............................................. 11
`b. Policies to “bury” potential competitors ................... 11
`c. Harms to competition and consumers ..................... 13
`B. Procedural Background .......................................................... 14
`
`i
`
`
`
`USCA Case #21-7078 Document #1930765 Filed: 01/14/2022 Page 6 of 99
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`
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`Page
`1. The States’ complaint ...................................................... 14
`2. The district court’s dismissal .......................................... 15
`STANDARD OF REVIEW....................................................................... 18
`SUMMARY OF ARGUMENT ................................................................. 18
`ARGUMENT ........................................................................................... 22
`POINT I
`THE DISTRICT COURT ERRED IN APPLYING LACHES TO DISMISS
`THE STATES’ ACQUISITION-BASED CLAIMS ............................................ 22
`A. Laches Does Not Apply to States Suing to Enforce
`the Law and Protect Public Rights. ........................................ 22
`B. Assuming That Laches Can Apply Against the States,
`the District Court Misapplied the Doctrine to Bar the
`States’ Claims Here. ............................................................... 28
`1. The district court improperly “presumed” prejudice
`to Facebook without adequate factual basis. .................. 30
`2. The district court improperly assumed that the
`States unreasonably delayed in filing their complaint. .... 36
`
`POINT II
`THE DISTRICT COURT ERRED IN DISMISSING THE STATES’
`PLATFORM-BASED CLAIM ..................................................................... 42
`A. The District Court Wrongly Concluded That
`Injunctive Relief Was Unavailable for the Alleged
`Platform-Related Conduct. ..................................................... 44
`
`
`
`ii
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`USCA Case #21-7078 Document #1930765 Filed: 01/14/2022 Page 7 of 99
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`Page
`
`2.
`
`1. The district court had no basis for finding that
`Facebook ceased its unlawful conduct when the
`complaint alleges otherwise. ........................................... 44
`Injunctive relief would remain available even
`if Facebook had in fact halted anticompetitive
`platform-related conduct. ................................................ 46
`B. The District Court Erroneously Disregarded the
`States’ Allegations Regarding the Scope and Effect
`of Facebook’s Platform Policy. ................................................ 50
`C. The District Court Too Narrowly Construed Both
`the Alleged Course of Conduct and Governing
`Antitrust Precedents. .............................................................. 53
`1. The district court improperly evaluated Facebook’s
`platform-related conduct in isolation, rather than
`as part of a unified course of conduct. ............................. 55
`2. The district court erred in construing Facebook’s
`platform-related conduct as a mere refusal to deal
`that could not give rise to antitrust liability as a
`matter of law. ................................................................... 58
`3. The district court improperly dismissed the States’
`claims without providing an opportunity for further
`factual development. ........................................................ 67
`CONCLUSION ........................................................................................ 70
`
`
`
`
`
`
`iii
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`
`
`USCA Case #21-7078 Document #1930765 Filed: 01/14/2022 Page 8 of 99
`
`TABLE OF AUTHORITIES1
`
`Page(s)
`
`Cases
`Allee v. Medrano,
`416 U.S. 802 (1974) ............................................................................. 46
`*Aspen Skiing Co. v. Aspen Highlands Skiing Corp.,
`472 U.S. 585 (1985) ........................................................... 21, 63, 64, 67
`Atherton v. District of Columbia Office of the Mayor,
`567 F.3d 672 (D.C. Cir. 2009) ............................................................. 69
`Biden v. Knight First Amend. Inst. at Columbia Univ.,
`141 S. Ct. 1220 (2021) ..................................................................... 3, 67
`California v. American Stores Co.,
`495 U.S. 271 (1990) ....................................................................... 26, 27
`City of Anaheim v. Southern Cal. Edison Co.,
`955 F.2d 1373 (9th Cir. 1992) ....................................................... 56, 58
`*Continental Ore Co. v. Union Carbide & Carbon Corp.,
`370 U.S. 690 (1962) ....................................................................... 21, 56
`Costello v. United States,
`365 U.S. 265 (1961) ....................................................................... 25, 35
`Covad Commc’ns Co. v. Bell Atl. Corp.,
`398 F.3d 666 (D.C. Cir. 2005) ....................................................... 22, 68
`*Daingerfield Island Protective Soc’y v. Lujan,
`920 F.2d 32 (D.C. Cir. 1990) ............................................. 29, 30, 31, 36
`Duty Free Ams., Inc. v. Estée Lauder Cos.,
`797 F.3d 1248 (11th Cir. 2015) ........................................................... 48
`
`1 Authorities upon which we chiefly rely are marked with asterisks.
`iv
`
`
`
`USCA Case #21-7078 Document #1930765 Filed: 01/14/2022 Page 9 of 99
`
`
`Page(s)
`
`Cases
`*Eastman Kodak Co. v. Image Tech. Servs., Inc.,
`504 U.S. 451 (1992) ....................................................................... 63, 67
`Farrar v. Nelson,
`2 F.4th 986 (D.C. Cir. 2021) ............................................................... 18
`Ford Motor Co. v. United States,
`405 U.S. 562 (1972) ............................................................................. 49
`*Friends of the Earth, Inc. v. Laidlaw Env’t Servs. (TOC), Inc.,
`528 U.S. 167 (2000) ................................................................. 20, 46, 47
`FTC v. Actavis, Inc.,
`570 U.S. 136 (2013) ............................................................................. 61
`FTC v. Facebook, Inc.,
`No. 20-cv-3590 (D.D.C. Jan. 12, 2022) ......................................... 17, 35
`FTC v. Qualcomm Inc.,
`969 F.3d 974 (9th Cir. 2020) ............................................................... 68
`Gaudreau v. American Promotional Events, Inc.,
`511 F. Supp. 2d 152 (D.D.C. 2007) ..................................................... 33
`Gregory v. Ashcroft,
`501 U.S. 452 (1991) ............................................................................. 26
`*Guaranty Tr. Co. of N.Y. v. United States,
`304 U.S. 126 (1938) ........................................................... 18, 19, 22, 23
`Gull Airborne Instruments, Inc. v. Weinberger,
`694 F.2d 838 (D.C. Cir. 1982) ........................................................ 33-34
`Hurd v. District of Columbia, Gov’t,
`864 F.3d 671 (D.C. Cir. 2017) ............................................................. 44
`Illinois v. Kentucky,
`500 U.S. 380 (1991) ............................................................................. 23
`
`
`
`v
`
`
`
`USCA Case #21-7078 Document #1930765 Filed: 01/14/2022 Page 10 of 99
`
`
`Page(s)
`
`Cases
`In re G-Fees Antitrust Litig.,
`584 F. Supp. 2d 26 (D.D.C. 2008) ....................................................... 48
`In re Nifedipine Antitrust Litig.,
`335 F. Supp. 2d 6 (D.D.C. 2004) ......................................................... 48
`International Tel. & Tel. Corp. v. General Tel. & Elecs. Corp.,
`518 F.2d 913 (9th Cir. 1975) ......................................................... 26, 31
`Kaiser Aluminum & Chem. Sales, Inc. v. Avondale Shipyards, Inc.,
`677 F.2d 1045 (5th Cir. 1982) ............................................................. 31
`LePage’s Inc. v. 3M,
`324 F.3d 141 (3d Cir. 2003) .................................................... 56, 57, 58
`*Lorain Journal Co. v. United States,
`342 U.S. 143 (1951) .................................................................. 60-61, 62
`Loumiet v. United States,
`828 F.3d 935 (D.C. Cir. 2016) ............................................................. 38
`Massachusetts ex rel. Bellotti v. Russell Stover Candies, Inc.,
`541 F. Supp. 143 (D. Mass. 1982) .................................................. 23-24
`Massachusetts v. EPA,
`549 U.S. 497 (2007) ............................................................................. 29
`*Menominee Indian Tribe of Wisconsin v. United States,
`614 F.3d 519 (D.C. Cir. 2010) ................................................. 18, 19, 28
`National Soc’y of Pro. Eng’rs v. United States,
`435 U.S. 679 (1978) ............................................................................. 48
`Novell, Inc. v. Microsoft Corp.,
`731 F.3d 1064 (10th Cir. 2013) ................................................ 61-62, 68
`Ohio, Dep’t of Transp. v. Sullivan,
`527 N.E.2d 798 (Ohio 1988) ................................................................ 23
`
`
`
`vi
`
`
`
`USCA Case #21-7078 Document #1930765 Filed: 01/14/2022 Page 11 of 99
`
`
`Page(s)
`Cases
`Olympia Equipment Leasing Co. v. Western Union Telegraph Co.,
`797 F.2d 370 (7th Cir. 1986) ............................................................... 68
`Optronic Techs., Inc. v. Ningbo Sunny Elec. Co.,
`20 F.4th 466 (9th Cir. 2021) ............................................................... 49
`Otter Tail Power Co. v. United States,
`410 U.S. 366 (1973) ....................................................................... 61, 65
`Petrella v. Metro-Goldwyn-Mayer, Inc.,
`572 U.S. 663 (2014) ............................................................................. 38
`Pro-Football, Inc. v. Harjo,
`415 F.3d 44 (D.C. Cir. 2005) ......................................................... 29, 31
`Pro-Football, Inc. v. Harjo,
`567 F. Supp. 2d 46 (D.D.C. 2008) ....................................................... 35
`Puerto Rico v. Carpenter Co.,
`442 F. Supp. 3d 464 (D.P.R. 2020)...................................................... 27
`*Ralls Corp. v. Committee on Foreign Inv. in the U.S.,
`758 F.3d 296 (D.C. Cir. 2014) ............................................. 5, 18, 20, 51
`SEC v. First Am. Bank & Tr. Co.,
`481 F.2d 673 (8th Cir. 1973) ............................................................... 47
`SEC v. Manor Nursing Ctrs., Inc.,
`458 F.2d 1082 (2d Cir. 1972) .............................................................. 47
`Smith-Haynie v. District of Columbia,
`155 F.3d 575 (D.C. Cir. 1998) ............................................................. 18
`Steves & Sons, Inc. v. JELD-WEN, Inc.,
`988 F.3d 690 (4th Cir. 2021) ............................................................... 38
`United States Forest Serv. v. Cowpasture River Pres. Ass’n,
`140 S. Ct. 1837 (2020) ......................................................................... 25
`
`
`
`vii
`
`
`
`USCA Case #21-7078 Document #1930765 Filed: 01/14/2022 Page 12 of 99
`
`
`Page(s)
`
`Cases
`United States v. Borden Co.,
`347 U.S. 514 (1954) ................................................................. 26, 29, 39
`United States v. Dentsply Int’l, Inc.,
`399 F.3d 181 (3d Cir. 2005) ................................................................ 53
`*United States v. Grinnell Corp.,
`384 U.S. 563 (1966) ....................................................................... 43, 54
`United States v. Letter from Alexander Hamilton to the
`Marquis de Lafayette Dated July 21, 1780,
`15 F.4th 515 (1st Cir. 2021) ................................................................ 23
`*United States v. Microsoft Corp.,
`253 F.3d 34 (D.C. Cir. 2001) ...... 3, 21, 32, 43, 48, 53, 54, 60, 63, 66, 67
`United States v. Mottolo,
`605 F. Supp. 898 (D.N.H. 1985) .......................................................... 23
`Verizon Commc’ns Inc. v. Law Offices of Curtis V. Trinko, LLP,
`540 U.S. 398 (2004) ................................................................. 61, 63, 64
`Viamedia, Inc. v. Comcast Corp.,
`951 F.3d 429 (7th Cir. 2020) ......................................................... 64, 68
`Washington v. LG Elecs., Inc.,
`375 P.3d 636 (Wash. 2016) ................................................................. 24
`Zenith Radio Corp. v. Hazeltine Rsch., Inc.,
`395 U.S. 100 (1969) ............................................................................. 32
`Laws
`15 U.S.C.
`§ 2 ........................................................................................................ 15
`§ 18 ...................................................................................................... 15
`§ 18a .................................................................................................... 41
`§ 26 ................................................................................................ 24, 25
`
`
`
`viii
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`
`
`USCA Case #21-7078 Document #1930765 Filed: 01/14/2022 Page 13 of 99
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`Page(s)
`
`Miscellaneous Authorities
`C. Scott Hemphill & Tim Wu, Nascent Competitors,
`168 U. Pa. L. Rev. 1879 (2020) ............................................... 37, 40, 66
`Competition & Mkts. Auth., Completed Acquisition by
`Facebook, Inc (Now Meta Platforms Inc) of Giphy, Inc.:
`Summary of Final Report (Nov. 30, 2021),
`https://tinyurl.com/ycknk247 ................................................................ 8
`Herbert Hovenkamp, Antitrust and Platform Monopoly,
`130 Yale L.J. 1952 (2021) ................................................................... 50
`Press Release, Eur. Comm’n, Mergers: Commission Fines
`Facebook €110 Million for Providing Misleading
`Information About WhatsApp Takeover (May 18, 2017),
`https://ec.europa.eu/commission/presscorner/detail/en/IP_17_1369 ...... 38
`1 William Blackstone, Commentaries (Lewis ed. 1902) (1765) .............. 23
`
`
`ix
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`USCA Case #21-7078 Document #1930765 Filed: 01/14/2022 Page 14 of 99
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`API
`
`FTC
`
`GLOSSARY
`application programming interface
`
`Federal Trade Commission
`
`x
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`
`
`USCA Case #21-7078 Document #1930765 Filed: 01/14/2022 Page 15 of 99
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`PRELIMINARY STATEMENT
`
`Facebook is a monopolist that has exploited its immense market
`
`power to crush competition. Through an ongoing course of conduct to “buy
`
`or bury” nascent competitors, Facebook has maintained a monopoly that
`
`harms its users and the public at large. A coalition of forty-eight plaintiff
`
`States2 filed this antitrust action to hold Facebook accountable for its
`
`anticompetitive conduct and protect consumers from further harm.
`
`Without allowing discovery, the U.S. District Court for the District of
`
`Columbia (Boasberg, J.) dismissed the States’ complaint, concluding that
`
`(1) laches barred the States’ claims based on Facebook’s anticompetitive
`
`acquisitions; and (2) the States could not obtain injunctive relief on their
`
`claim that Facebook sought to bury nascent competitors, including by
`
`conditioning and selectively denying access to its platform. This Court
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`should reverse.
`
`The district court’s determination that laches bars the States’
`
`acquisition-based claims is erroneous for multiple independent reasons.
`
`
`
`2 The plaintiffs include the forty-six States identified on the cover
`page, the District of Columbia, and the Territory of Guam; they are refer-
`red to collectively as “the States.”
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`USCA Case #21-7078 Document #1930765 Filed: 01/14/2022 Page 16 of 99
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`Laches does not apply against sovereign States suing to protect the public
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`interest, like the States here. And even if laches could apply against the
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`States, the district court misapplied the doctrine by failing to afford ade-
`
`quate deference to the States’ critical role in protecting the public interest
`
`through antitrust enforcement actions like this one. The district court
`
`thus erred in presuming—contrary to the allegations in the complaint—
`
`that Facebook would suffer prejudice and that the States had unreason-
`
`ably delayed their suit. As this Court has repeatedly recognized, such fact-
`
`intensive questions should not be resolved at the motion-to-dismiss stage.
`
`The district court’s dismissal of the States’ platform-based claim
`
`also warrants reversal—again, largely because the district court relied
`
`on presumptions contrary to the complaint. For example, the court
`
`assumed that Facebook had ceased its unlawful platform conduct by 2018
`
`and that injunctive relief was thus categorically unavailable. But the
`
`States’ complaint alleges otherwise. And injunctive relief remains avail-
`
`able even when a monopolist ceases its unlawful conduct. Similarly, the
`
`court credited Facebook’s characterizations of its platform policy, rather
`
`2
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`
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`USCA Case #21-7078 Document #1930765 Filed: 01/14/2022 Page 17 of 99
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`than accepting as true (as it was required to do) the complaint’s allega-
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`tions that Facebook’s policy prohibited third-party apps that posed a
`
`competitive threat from accessing its platform.
`
`At base, the district court’s refusal to allow the States to proceed to
`
`discovery reflected an extraordinary, insupportably narrow view of the
`
`scope of the federal antitrust laws. This Court has repeatedly made clear
`
`that antitrust laws must be applied flexibly because “the means of illicit
`
`exclusion, like the means of legitimate competition, are myriad.” United
`
`States v. Microsoft Corp., 253 F.3d 34, 58 (D.C. Cir. 2001) (en banc). And
`
`such flexibility is particularly important for digital markets like the one
`
`for personal social networking services, since “applying old doctrines to
`
`new digital platforms is rarely straightforward.” Biden v. Knight First
`
`Amend. Inst. at Columbia Univ., 141 S. Ct. 1220, 1221 (2021) (Thomas,
`
`J., concurring). The district court’s precipitous dismissal disregarded both
`
`the breadth of the antitrust laws and the extensive allegations in the
`
`States’ complaint, and freed Facebook to continue harming competition,
`
`chilling innovation and investment in social-networking alternatives,
`
`and degrading user experience, privacy, and data protection. This Court
`
`should reverse and allow the States’ well-pleaded claims to proceed.
`
`3
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`
`
`USCA Case #21-7078 Document #1930765 Filed: 01/14/2022 Page 18 of 99
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`JURISDICTIONAL STATEMENT
`
`The district court had jurisdiction under 28 U.S.C. §§ 1331 and 1337.
`
`The district court issued a final order on June 28, 2021. (Joint Appendix
`
`(JA) 216.) The States filed a timely appeal on July 28, 2021. (JA 284.)
`
`This Court has jurisdiction under 28 U.S.C. § 1291.
`
`ISSUES PRESENTED
`
`(1)(a) Whether the equitable doctrine of laches applies to sovereign
`
`state enforcement proceedings.
`
`(b) Whether, even if so, the district court failed to give adequate
`
`deference to the States’ enforcement prerogatives and improperly assumed
`
`prejudice to Facebook and unreasonable delay by the States in dismissing
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`the acquisition-based claims on laches grounds.
`
`(2)(a) Whether injunctive relief is available in this antitrust enforce-
`
`ment action by sovereign States.
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`(b) Whether the district court made improper assumptions, contrary
`
`to the complaint’s allegations, regarding the scope and effect of Face-
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`book’s platform policy.
`
`4
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`
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`USCA Case #21-7078 Document #1930765 Filed: 01/14/2022 Page 19 of 99
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`(c) Whether the district court too narrowly construed Facebook’s
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`alleged misconduct and well-settled antitrust principles in dismissing the
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`States’ monopolization claim.
`
`PERTINENT STATUTES
`
`Pertinent statutes are set forth in the addendum at the conclusion
`
`of this brief.
`
`STATEMENT OF THE CASE
`
`A. Factual Background3
`1. The market for personal social networking services
`Personal social networking services are online services that enable
`
`people to maintain personal relationships and share experiences with
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`friends, family, and other connections in a shared social space equivalent
`
`to a digital “town square.” (JA 50, 52-53 (¶¶ 28, 36).) Facebook is, by far,
`
`the largest personal social network, and dominates the market for personal
`
`social networking services. (JA 53, 61-62, 353-354 (¶¶ 38, 66-72).)
`
`
`
`3 The facts in this section are taken from the complaint and must
`be treated as true. See, e.g., Ralls Corp. v. Committee on Foreign Inv. in
`the U.S., 758 F.3d 296, 314 (D.C. Cir. 2014).
`5
`
`
`
`USCA Case #21-7078 Document #1930765 Filed: 01/14/2022 Page 20 of 99
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`The market for personal social networking services has distinct
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`features. First, users do not pay to use Facebook’s social network; instead,
`
`users provide Facebook their personal data, which Facebook monetizes
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`by selling ads tailored to its users. (JA 45, 57 (¶¶ 2-3, 51).) Second, there
`
`are substantial barriers to entering the market, including network effects:
`
`because the value of a network to users increases as more users join, new
`
`entrants have difficulty gaining traction against a well-established incum-
`
`bent like Facebook. (JA 54 (¶ 41).)
`
`2. Facebook’s dominance of the market for personal
`social networking services
`
`Facebook launched in 2004, when the market for personal social
`
`networking services was emerging. (JA 59 (¶¶ 60-61).) By 2008, Facebook
`
`had become the largest personal social network in the world and, by 2011,
`
`boasted that it comprised “95% of all social media in the US” (JA 60
`
`(¶¶ 66, 68)). Today, more than half of the U.S. population over age thir-
`
`teen use a Facebook service every day. (JA 45 (¶ 1).)
`
`Facebook initially came to dominate the market for personal social
`
`networking services, in substantial part, by entering into mutually bene-
`
`ficial relationships with third-party app developers. (JA 48, 62 (¶¶ 14,
`
`6
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`
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`USCA Case #21-7078 Document #1930765 Filed: 01/14/2022 Page 21 of 99
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`79).) Facebook created a set of application programming interfaces (APIs)
`
`that permit third-party apps to connect to, use features from, and share
`
`data with the Facebook platform. (JA 62-63 (¶¶ 80-82).) Among these
`
`APIs are (1) Find Friends, which allows users to find and interact with
`
`their Facebook friends on other apps; (2) Facebook Connect, which lets
`
`users sign into third-party apps using their Facebook credentials; and (3)
`
`Open Graph APIs, which enable third-party apps to add Facebook plug-
`
`ins such as a “Like” button on the third-party app. (JA 63, 90-91, 92-93
`
`(¶¶ 81-82, 190-191, 197).) Facebook benefits from offering its APIs because
`
`their use by third parties leads to greater user engagement and addi-
`
`tional user data that support Facebook’s advertising business. Third
`
`parties in turn value API access because it enables them to expand their
`
`products’ features and distribution. (JA 62-63, 92-93 (¶¶ 80-82, 195-197).)
`
`3. Facebook’s ongoing efforts to “buy or bury”
`potential competitors
`
`Once Facebook dominated the market for social networking services
`
`(see supra at 6), it initiated a strategy to maintain its monopoly power by
`
`either buying potential competitors, or, if buying was not an option,
`
`7
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`USCA Case #21-7078 Document #1930765 Filed: 01/14/2022 Page 22 of 99
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`burying them by exploiting reliance on its platform to prevent them from
`
`successfully competing. (JA 45-46, 67-68, 69 (¶¶ 4-6, 99, 104).)
`
`a. Acquisitions to “buy” nascent competitors
`From 2012 through 2020, Facebook acquired dozens of companies,
`
`and pursued many more acquisitions. Many acquisitions were pursued
`
`in an anticompetitive effort to eliminate or thwart nascent competition—
`
`in Facebook CEO Mark Zuckerberg’s words, to “build a competitive moat”
`
`around Facebook—and maintain its monopoly. (JA 46, 69-70 (¶¶ 5, 105-
`
`106).) Facebook continues to seek to identify and acquire competitive
`
`threats. (JA 88-89 (¶¶ 181-183).)4
`
`
`
`
`
`
`
`
`
`4 For instance, while this appeal was pending, the United Kingdom’s
`competition authority determined that Facebook’s recent acquisition of
`the leading provider of “GIF” visual content, GIPHY, was anticom-
`petitive, and ordered Facebook to divest GIPHY. See Competition &
`Mkts. Auth., Completed Acquisition by Facebook, Inc (Now Meta Platforms
`Inc) of Giphy, Inc.: Summary of Final Report (Nov. 30, 2021),
`https://tinyurl.com/ycknk247.
`
`8
`
`
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`USCA Case #21-7078 Document #1930765 Filed: 01/14/2022 Page 23 of 99
`
`
`i.
`When Facebook acquired Instagram, Instagram was an innovative
`
`and rapidly growing social network emphasizing photo sharing. While
`
`Facebook was built for computers, Instagram was built for increasingly
`
`popular mobile devices with built-in cameras. (JA 70 (¶¶ 107-110).)
`
`Zuckerberg believed mobile-based apps like Instagram could
`
`“replace us” (JA 71 (¶ 111)), given Facebook’s weakness in exploiting
`
`mobile photos (JA 68, 71 (¶¶ 100, 113)). That threat to Facebook’s mono-
`
`poly led Zuckerberg to pursue acquiring Instagram to, as he admitted,
`
`“neutralize a potential competitor.” (JA 71-72 (¶¶ 114-116).) Instagram
`
`got the message. As its CEO explained, it would accept the acquisition to
`
`avoid “the wrath of [M]ark”—that is, the risk that Facebook would exploit
`
`Instagram’s reliance on Facebook’s APIs to bury Instagram if Instagram
`
`refused to sell. (JA 73 (¶ 120).)
`
`Instagram accordingly agreed to be acquired by Facebook for $1
`
`billion. At the time, Instagram had only sixteen employees and no revenue
`
`stream. A substantial portion of the purchase price was a premium
`
`Facebook was willing to pay to remove a competitive threat. (JA 70, 74
`
`(¶¶ 107, 122).)
`
`9
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`USCA Case #21-7078 Document #1930765 Filed: 01/14/2022 Page 24 of 99
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`ii. WhatsApp
`Having subdued the competitive threat of Instagram, Facebook
`
`identified its relative weakness in mobile messaging as its top remaining
`
`competitive threat in the mobile era. (JA 69, 80-82 (¶¶ 103, 150-153).)
`
`Facebook was particularly concerned about WhatsApp, a fast-growing
`
`messaging app that Facebook viewed as a “category leader” with “better
`
`interface” and “better product” than other messaging apps. WhatsApp
`
`was available on multiple mobile operating systems and had recently
`
`surpassed Facebook’s messenger service as the world’s most popular
`
`messaging app. (JA 82-83 (¶¶ 154-157, 159-160).) Although WhatsApp
`
`did not then offer personal social networking services, Facebook was
`
`concerned that it could capita