By Mike Scarcella

WASHINGTON, March 31 (Reuters) - Meta Platforms META.O must face an antitrust lawsuit from photo-sharing app Phhhoto that claims the social media giant used its monopoly power to put it out of business, a federal judge ruled on Monday.

U.S. District Judge Kiyo Matsumoto in Brooklyn said Phhhoto plausibly alleged that Meta suppressed the visibility of the app’s animated photographs on Facebook and Instagram.

Phhhoto alleges Meta maintained an illegal monopoly in the market for personal social networking services in violation of federal antitrust law.

The startup will be allowed to pursue claims that Meta built a competing app using confidential information obtained during partnership talks. It may also proceed with allegations that Meta secretly used its newsfeed algorithm to suppress Phhhoto content on Facebook and Instagram.

Matsumoto trimmed several other claims from the lawsuit, which was filed in 2021. Meta has denied wrongdoing and had asked the court to dismiss the case.

Meta in a statement said "this suit is baseless and we will continue to defend ourselves vigorously.“

A lawyer for Phhhoto did not immediately respond to requests for comment.

Phhhoto launched in July 2014 as an iPhone app built around animated looping photos and grew to 10 million users, including 1.3 million daily active users, by 2016 before shutting down in June 2017, according to court records.

"Meta used its control of critical infrastructure to degrade the quality of Phhhoto's content and the performance of its app, as well as to mislead and harm consumers," Phhhoto's attorneys told the court.

Phhhoto alleges Meta launched rival app Boomerang in 2015 on the same day that Phhhoto was planning to announce its availability on Android devices.

The startup alleges Meta's conduct caused it to lose users, investor funding and ultimately its business.

Matsumoto initially dismissed the lawsuit but an appeals court in 2024 ordered her to take a second look at Phhhoto’s claims.

Meta faces other antitrust lawsuits. In Washington, the U.S. Federal Trade Commission is seeking to revive the agency’s case accusing Meta of using its acquisitions of Instagram and WhatsApp to illegally bolster its social networking services monopoly.

The case is Phhhoto Inc v Meta Platforms, U.S. District Court for the Eastern District of New York, No. 1:21-cv-06159.

For Phhhoto: Scott Martin of Hausfeld

For Meta: Aaron Panner of Kellogg Hansen Todd Figel & Frederick

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