In a surprising twist of events, a U.S. appeals court has revived an antitrust lawsuit against Meta initiated by the now-defunct social app Phhhoto. Originally filed in late 2021, the lawsuit claimed that Meta engaged in anti-competitive practices by imitating Phhhoto’s core features and stifling its business growth. The case was initially dismissed by U.S. District Judge Kiyo Matsumoto, who ruled that the statutes of limitations had expired. However, the appeals court has now determined these time limits should not have applied, giving Phhhoto a fresh opportunity to present its case.
The crux of Phhhoto’s allegations involves Instagram’s algorithmic changes, which they claim suppressed their content, resulting in a decline in user engagement and registrations. This, they argue, allowed Meta’s platforms to flourish at Phhhoto’s expense. Phhhoto recounts a telling experiment where a video post on Instagram garnered significant traction when posted via another account but failed to perform on Phhhoto’s account, despite having a larger following.
Initially, the district court did not consider these allegations due to the Sherman Act’s four-year statute of limitations. Yet, Phhhoto insists that Meta’s actions were not only anti-competitive but also included deceptive measures that concealed these practices. Allegedly, Meta withdrew Phhhoto’s access to the “Find Friends” API right before Instagram launched an algorithmic feed in 2016. Additionally, Meta pivoted away from incorporating Phhhoto’s content into the Facebook News Feed as previously planned and then launched Instagram Boomerang, which Phhhoto claims directly imitated its technology.
A pivotal point in Phhhoto’s appeal was the revelation of hidden manipulations by Meta, discovered in December 2018 through lawsuit documents. It was disclosed that Meta employed a tactic called Project Amplify, which reportedly manipulated content visibility in users’ feeds for Meta’s gain. Phhhoto contends that such actions warranted an extension of the statute of limitations under the principle of “equitable tolling based on fraudulent concealment.”
While the appeals court has not issued a final verdict on the substantive claims, it did find fault in the lower court’s analysis, allowing the case to proceed. Now, Phhhoto’s antitrust claims will return to district court for a thorough evaluation.
A Meta spokesperson reaffirmed the company’s stance, stating, “As we have said since the beginning, this suit is baseless and we will continue to vigorously defend ourselves.”
With the case set to be reexamined, all eyes are on the unfolding legal battle as it raises crucial questions about competition, fairness, and the dynamics of the tech industry.
