I'm calling it a beatdown. I am talking about the federal court ruling against the Federal Trade Commission in its crusade to stop Facebook (FB) from monopolizing personal social networking services in a way that damages the users.
The ruling, by Federal Court Judge James Boasberg, amounted to nothing less than a primer of how wrong the FTC and 40 states are in the way they brought the case and the remedies they sought. Boasberg, a very distinguished jurist, appointed by former President Obama, filled with caustic comments, amounted to a "better luck next time" reproach.
I say better luck next time because I am confident there will be a next time. This FTC, a Trump FTC, really fumbled in its attempts to explain who was hurt, why they were hurt and what should be done about it.
At the same time, Boasberg laid out a roadmap for how to bring a case that might have a better chance of a different outcome and you can bet the new FTC head, the 32 year old firebrand, Lina Khan, is going to pursue Facebook in a different, more thoughtful way.
And yet I still think she will lose.
In fact I think that this case shows you how any government attempt to contain big tech might fail. I am surprised that their stocks aren't all running because, unlike Congress, the bench is interested in real facts, not grandstanding, and the real facts don't amount to abuse of monopoly, even if you agree that Facebook is a monopoly to begin with, something that's easily disputable when you consider Twitter (TWTR) , TikTok and Snap (SNAP) .
We know that somehow both parties are united only on the idea that these companies, and here we are speaking of FAANG, my acronym for Facebook, Amazon (AMZN) , Apple (AAPL) , Netflix (NFLX) and Google (Alphabet (GOOGL) ), are just too powerful.
But what we saw in this ruling is that you need much more than just power as a reason to stop these companies. And here, I am choosing to be amorphous using the word "stop" because this FTC and these states haven't really figured out what to do to basically hobble a very popular product that it doesn't feel blocks any other popular product from emerging as a true competitor.
Plus, in the most damning part of the ruling the judge pointed out that Facebook's acquisition of Instagram - or Insta, as he reminds us what kids call it - and What's App, exhibits A & B of innovation stifling got lengthy reviews by the FTC before they were blessed. Therefore, it's not as easy to undue. I would have added that most wags thought that Zuckerberg wildly overpaid for both of them and couldn't' figure out what in the world he could do to justify them. That alone would tell the tale because anyone in FAANG could have bought them to compete with Facebook if they so desired.
Facebook's stock rocketed 15 points on the news in part because one could argue with no harm there is no remedy. Could the same be said for Apple with the APP store? With Alphabet with search, Amazon with its own products? I could argue that in each case the consumer's benefit far outweighs the loss of a competitor. If they charge too much someone will develop a competitor.
I speculated that this could be high water mark in the government's attempt to come down on the biggest techs. That's probably wrong given the new aggressive head of the FTC. But it is a reminder that the government is NOT a reason to sell these stocks. Sales and earnings are. And all of them have the metrics in spades.