In late 2021, the long-shuttered social app Phhhoto filed an antitrust lawsuit against Meta. The startup alleged that Meta violated U.S. antitrust law by copying its core features and suppressing competition. U.S. District Judge Kiyo Matsumoto in 2023 granted Meta's motion to dismiss the complaint due to time limitations. However, on appeal, the court found that the case should have been heard as these time limits should not have applied.

Implications for Phhhoto

This decision gives Phhhoto another chance to argue that Meta engaged in anti-competitive behavior, ultimately leading to the demise of its company after Meta copied its features and restricted its growth. The case raises questions about how Meta used the introduction of an algorithm feed on Instagram to suppress Phhhoto's content, resulting in a decline in user registrations and engagement while Meta's own app gained popularity.Phhhoto claims that it discovered the algorithmic manipulation when it used a different account to post a video on Instagram. The same post received more likes and views on the other account, even though Phhhoto's account had 500 times more followers. This disparity led to concerns about Meta's actions.The district court never ruled on these claims as the judge determined that the four-year statute of limitations under the Sherman Act had expired. Phhhoto also argues that Meta used other anticompetitive tactics to harm its business.For instance, before Instagram launched its algorithmic feed in March 2016, Phhhoto alleged that Meta withdrew its access to the "Find Friends" API. This API allows third-party apps like Phhhoto to tap into Meta's social graph. Additionally, Meta terminated its plans to integrate Phhhoto's content into the Facebook News Feed as originally planned. Meta also introduced its own competitive product, the looping video app Instagram Boomerang, which copied Phhhoto's technology.Image Credits: MetaPhhhoto's appeal suggested that its case should have been heard by the court as the relevant part of its antitrust claim should have been subject to "equitable tolling based on fraudulent concealment." In other words, the court should have paused the statute of limitations as Phhhoto did not discover the issues with Meta's algorithmic feed until later. The company found out in December 2018 when documents filed in a federal lawsuit in California were made public, revealing that Meta had run a program called Project Amplify that manipulated and reordered posts and content in consumers' feeds for Meta's benefit.While the appeals court is not making a final decision on the case (as it never reached the point of a ruling), it concluded that the lower court erred at "each step of the fraudulent concealment analysis." This means the court's earlier decision against Phhhoto's antitrust claim was untimely and the case should be heard.The case will now be sent back to the district court for trial.Responding to a request for comment, a Meta spokesperson said, "As we have said since the beginning, this suit is baseless and we will continue to vigorously defend ourselves."