Photo’s defamation claim against Meta is back in court

A US appeals court has overturned a decision in an antitrust case against Meta, which was filed in late 2021 by the long-closed social media app Photo. In court, the startup alleged that Meta violated US antitrust law by copying its core features and stifling competition. US District Judge Kiyo Matsumoto in 2023 granted Meta’s motion to dismiss the complaint due to the time limits imposed by the relevant statutes of limitations. However, during the appeal, the court found that the case should have been tried because these deadlines should not have been used.

The decision means that Photo will have another chance to argue that Meta behaved in an anti-competitive manner, eventually putting its company out of business after copying its features and limiting its growth.

The case asks if and how Meta used the introduction of the feed algorithm on Instagram to suppress Photo content, which led to a decrease in Photo user registration and engagement while the Meta application itself gained strength.

Photo says he discovered algorithmic manipulation when he used a different account to post a video on Instagram. The same post did not gain traction when shared on Photo’s account, but another account’s video received more likes and views, even though Photo’s account had 500 times more followers, the lawsuit said.

The district court did not rule on the claims because the judge ruled that the Sherman Act’s four-year statute of limitations had run out.

Photo also claims that Meta used other anticompetitive tactics to harm its business.

For example, before Instagram launched its algorithmic feed in March 2016, Photo alleged that Meta revoked its access to the “Find Friends” API, allowing third-party apps like it to tap into Meta’s public graph. In addition, Meta terminated its plans to integrate Photo content into the Facebook News Feed, as planned, the lawsuit said. Meta came after Photo with its competing product, too: the looping video app Instagram Boomerang, which copied Photo’s technology, the startup said.

Photo’s appeal argued that his case should have been tried in court because the proper part of his antitrust claim should have been subject to “an equitable tolling based on fraudulent concealment.” Or, in other words, the court should have suspended the statute of limitations because Photo didn’t discover the problem with Meta’s algorithmic feed until later. The company discovered in December 2018, when documents filed in a federal lawsuit in California were made public, that Meta ran a program called Project Amplify, which manipulated and reorganized posts and content in consumer feeds for Meta’s benefit.

Although the appeals court did not make a final decision on the case itself (as it never reached the verdict stage), it concluded that the lower court erred “at each step of the fraud concealment analysis,” meaning that the court’s previous ruling against Photo’s antitrust claim was timely and the case should be heard.

The case will be sent back to the district court for trial.

In response to a request for comment, a spokesperson for Meta said “As we have said from the beginning, this case is baseless and we will continue to vigorously defend ourselves.”

Updated after publication with Meta comments.