FTC and Meta Face Off in Antitrust Case

U.S. v. Meta opened yesterday in a federal court in Washington D.C., with the Federal Trade Commission (FTC) calling Meta CEO Mark Zuckerberg as its first witness in the historical antitrust trial. The government argues that Meta illegally obtained, maintained, and grew a monopoly in social media. And while this outcome is unlikely, there’s a chance that Meta will need to divest itself of Instagram and WhatsApp if it loses the case.

“They [Meta, then Facebook] decided that competition was too hard, and it would be easier to buy out their rivals than to compete with them,” the FTC’s lead attorney said during his opening statement, referring to the defendant’s separate acquisitions of Instagram and WhatsApp.

When asked about “the core value proposition” of Meta’s various social media services, Zuckerberg argued that it was no longer about connecting family, friends, and other people. Instead, Meta’s services are “more of a broad discovery-entertainment space.” This is aimed at undercutting the government’s argument that Meta even has a monopoly, as it expands the definition of the market to include not just Snap but also TikTok, X, YouTube, and other services.

The FTC displayed evidence showing that Meta (Facebook) acquired Instagram in 2012 and WhatsApp in 2014 because it couldn’t compete effectively with the services. In a 2012 email, Zuckerberg suggested that his company purchase Instagram to “neutralize a potential competitor.” Later that year, he complained that Facebook Messenger wasn’t “beating WhatsApp” and that it had to acquire Instagram because “Instagram was growing so much faster than us [so] we had to buy them for $1 billion.”

50 percent of Meta’s revenues come from advertising on Instagram, the FTC noted, so the service has become increasingly important to the business. But Meta’s lawyers argued that it was the company’s involvement that helped Instagram become so successfully. “Consumers have been the big winners,” one lawyer said Monday.

Looked at remotely, this case seems to resemble U.S. v. Microsoft from 25 years ago. The government argued that the company has a monopoly, which it does today, but the defendant counters that there is competition, and that new, unforeseen competitors are always right around the corner. Both opinions are correct, but the commonality is the illegal behavior in each case. In this case, Meta absolutely did buy companies specifically because it feared would otherwise harm its dominance. That’s illegal, if the courts agree that Meta had a monopoly at the time.