Meta faces renewed antitrust lawsuit from defunct app Phhhoto

A U.S. appeals court has overturned the dismissal of an antitrust lawsuit filed against Meta by the now-defunct social app Phhhoto, allowing the case to proceed. The lawsuit, originally filed in 2021, accuses Meta of violating U.S. antitrust laws by copying Phhhoto’s features and employing anti-competitive tactics that allegedly led to the app’s shutdown.

The initial decision by U.S. District Judge Kiyo Matsumoto in 2023 dismissed the case, citing the expiration of the four-year statute of limitations under the Sherman Act. However, the appeals court ruled that the time limits should not have applied due to “equitable tolling based on fraudulent concealment,” arguing that Phhhoto only became aware of key issues, including alleged algorithmic manipulation by Meta, in December 2018.

Phhhoto claims that Meta’s actions, including the introduction of an algorithmic feed on Instagram, suppressed its content and restricted user growth. The company discovered the alleged manipulation when comparing engagement on similar posts shared from different accounts, noting significant discrepancies in reach despite Phhhoto’s account having a larger follower base.

The lawsuit also alleges that Meta withdrew access to its 'Find Friends' API, terminated a planned integration of Phhhoto’s content into Facebook’s News Feed, and launched a competing product, Instagram Boomerang, which the startup claims copied its technology.

The appeals court concluded that the lower court erred in its analysis of fraudulent concealment, warranting a new hearing of the case. The decision does not resolve the merits of Phhhoto’s claims but returns the case to the district court for trial.