Social media giant Facebook closed above $1 trillion in market capitalization for the first time on Monday. It joins four other US companies in this exclusive feat. The others are Apple, Microsoft, Amazon, and Alphabet (Google).
Facebook Hits $1 Trillion Capitalization
The social company’s shares closed 4.2% higher at $355.64. As a result, its market capitalization hit above $1 trillion. When it went public in May 2012, Facebook debuted with a market cap of $104 billion. Its revenue comes from advertising.
Its Facebook and Instagram platforms have a combined reach of around 3 billion users. The company is also designing hardware products. They own the Oculus VR headsets and glasses. In addition, they're developing the Portal video-calling device.
Facebook’s stock prices went up when a federal judge dismissed an antitrust complaint filed by the US Federal Trade Commission and a 48 state attorneys general.
In a statement issued after the ruling, the company said they welcomed the vindication. “We are pleased that today’s decisions recognize the defects in the government complaints against Facebook.
We compete fairly every day to earn people’s time and attention and will continue to deliver great products for the people and businesses that use our services.”
As a result of the court decision, investors cheered on Facebook, bringing its share prices up by more than 4% on Monday. Had the ruling favored the FTC and the states, the courts might have ordered Facebook to break up the company into smaller units. Instead, it said that the FTC needs more evidence to prove its allegations.
The FTC, alongside a parallel suit from 48 states, sued the company last December. The agency accused the social media company of engaging in a systematic strategy of eliminating competitors.
This includes the acquisitions of one-time rival Instagram as well as messaging app WhatsApp. Ironically, the FTC previously cleared both these buyouts at the time.
Federal Court Ruling
However, the court favored Facebook this time. On Monday, the US District Court for the District of Columbia ruled Monday that the FTC failed to prove its main contention and the cornerstone of the case. It held that Facebook wields monopoly power in the US personal social networking market.
“Although the Court does not agree with all of Facebook’s contentions here, it ultimately concurs that the agency’s Complaint is legally insufficient and must therefore be dismissed.
The FTC has failed to plead enough facts to plausibly establish a necessary element of all of its Section 2 claims — namely, that Facebook has monopoly power in the market for Personal Social Networking (PSN) Services,” part of the ruling read.
In essence, the court said the FTC did not provide enough detailed data to prove Facebook has market power in the loosely defined market for personal social networking services. “The Complaint is undoubtedly light on specific factual allegations regarding consumer-switching preferences.
These allegations — which do not even provide an estimated actual figure or range for Facebook’s market share at any point over the past ten years — ultimately fall short of plausibly establishing that Facebook holds market power,” the court wrote.
Facebook No Stranger To Lawsuits
Due to its massive following and its very diverse user base, Facebook attracts a lot of legal attention throughout its history. In 2018, the company suffered an almost 20% plunge in stock prices after posting lower than expected revenues and lower user numbers.
That year, Facebook was hit by a number of issues, including accusations of data leaks, fakes news, and improperly targeting ads. The Cambridge Analytica scandal got 87 million Facebook user's data, which is then sent targeted ads from former President Donald Trump campaigning for the 2016 elections.
However, Facebook managed to weather the scandals and maintain its dominance in Western social media. It resumed increasing its user base and by extension, widened the reach of its sponsored ads. As a result, stock prices are now trading at $355.64 as of Monday’s close. This is more than 90% higher than its July 2018 stock price.
Watch the Reuters news video reporting that Facebook hits $1 trillion after the antitrust ruling:
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