A U.S. appeals court has revived an antitrust lawsuit against Meta, initially filed in late 2021 by the defunct social app Phhhoto. The lawsuit accused Meta of violating U.S. antitrust laws by copying Phhhoto’s core features and stifling competition. In 2023, U.S. District Judge Kiyo Matsumoto dismissed the case, citing the expiration of the statute of limitations under antitrust law. However, the appeals court ruled that the case should proceed, as the time limits may not apply in this situation.
This decision gives Phhhoto another chance to argue that Meta’s actions were anti-competitive, ultimately driving the app out of business. The lawsuit centers on allegations that Meta used Instagram’s algorithmic feed to suppress Phhhoto’s content, which harmed its user engagement and growth while benefiting Instagram.
Phhhoto claims it discovered algorithmic interference when it observed that a post shared on Instagram from a different account outperformed a similar post shared via Phhhoto’s official account, despite the latter having significantly more followers. The district court previously did not address these claims, as it dismissed the case based on the four-year statute of limitations under the Sherman Act.
Phhhoto further alleges that Meta employed other tactics to undermine its business. These include revoking access to the “Find Friends” API before Instagram introduced its algorithmic feed in 2016, canceling plans to integrate Phhhoto content into Facebook’s News Feed, and launching Instagram Boomerang, a product that replicated Phhhoto’s technology.
In its appeal, Phhhoto argued that the statute of limitations should have been paused due to “fraudulent concealment,” meaning the company couldn’t have discovered Meta’s alleged misconduct earlier. Phhhoto only became aware of certain practices, such as Meta’s “Project Amplify,” in December 2018, when court documents in another case were made public. Project Amplify reportedly manipulated content in users’ feeds for Meta’s advantage.
Although the appeals court hasn’t made a final ruling on the antitrust claims, it determined that the lower court’s handling of the fraudulent concealment analysis was flawed. As a result, the case will return to the district court for trial.
A Meta spokesperson responded, stating, “As we have said since the beginning, this suit is baseless, and we will continue to vigorously defend ourselves.”