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Meta Braces for Antitrust Showdown with FTC Over Instagram and WhatsApp Acquisitions
Social media giant Meta is set to confront the Federal Trade Commission (FTC) in a significant legal battle starting Monday, a case poised to potentially reshape the competitive dynamics of the social media industry. The antitrust trial centers around the core question of whether Meta’s acquisitions of Instagram and WhatsApp constituted unlawful monopolization.
Government to Argue Acquisitions Eliminated Competition
Over the ensuing two months, the US government will present its argument asserting that Meta’s past acquisitions of Instagram in 2012 and WhatsApp in 2014 were anticompetitive, effectively eliminating emerging competitive threats and solidifying its market dominance. Meta, formerly known as Facebook, will defend its actions by contending that its stewardship fostered the growth of these platforms into thriving global businesses with billions of users, all while operating within a competitive marketplace. High-ranking Meta executives, including CEO Mark Zuckerberg and former COO Sheryl Sandberg, are expected to give testimony during the proceedings in Washington, DC.
A Long-Brewing Legal Challenge
This trial has been anticipated for an extended period. Originating from a lawsuit initiated during the Trump administration and subsequently amended under the Biden administration, the FTC is pursuing remedies that could include the dramatic step of unwinding Meta’s major mergers. This case marks the third significant US antitrust trial targeting Big Tech in recent years, following the Justice Department’s successful case against Google’s search dominance and a pending decision in a separate case concerning Google’s ad technology practices. The proceedings unfold against a backdrop of evolving perspectives on antitrust enforcement in digital markets, a movement gaining bipartisan traction. However, the specific approach under a potential new Trump administration remains uncertain, despite his FTC chair nominee’s stated intent to take a firm stance against Big Tech, albeit with a focus on content moderation concerns.
Meta’s Overtures to the Trump Administration
Leading up to the trial, Meta has demonstrably attempted to build rapport with the Trump political sphere. Zuckerberg’s participation alongside other tech CEOs at President Donald Trump’s inauguration, followed by Meta’s settlement of a lawsuit initiated by Trump after his platform bans post-January 6th, illustrate this effort. The settlement involved a $25 million payment from Meta, largely earmarked for Trump’s presidential library. Furthermore, Zuckerberg’s public announcement about discontinuing Meta’s fact-checking program included a stated willingness to “work with President Trump to push back on governments around the world” regarding censorship issues.
Zuckerberg’s Lobbying Efforts and Trial Outlook
Recent reports indicate Zuckerberg’s direct lobbying of Trump to dismiss the FTC lawsuit. While FTC Chair Andrew Ferguson has suggested he would comply with such a directive from Trump, the trial is currently scheduled to commence on April 14th. The initial phase of the trial will focus on determining whether Meta violated antitrust laws. Should Judge James Boasberg rule against Meta on this point, a subsequent trial would address remedies for the alleged anticompetitive harms, potentially including a forced breakup of the company.
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FTC Alleges Illegal Monopolization Through Acquisitions
The FTC’s core argument rests on the assertion that Meta illegally monopolized the market for “personal social networking services” through anticompetitive acquisitions strategically employed to “neutralize” potential competitors. Judge Boasberg previously dismissed the FTC’s initial complaint in mid-2021, citing insufficient factual evidence to substantiate monopoly power. He also rejected a parallel complaint from a coalition of states concerning acquisitions cleared by the FTC years prior.
Amended Complaint and “Tall Task” Ahead
However, Judge Boasberg permitted the FTC to submit an amended complaint. He found the revised case largely sufficient to proceed, though he dismissed certain allegations related to Facebook’s platform interoperability policies. Despite allowing the amended complaint, he cautioned that the FTC “may well face a tall task down the road in proving its allegations.”
Key Witnesses and Industry Observation
The upcoming trial is expected to feature testimony from a range of prominent current and former Meta leaders, including Zuckerberg, Sandberg, CTO Andrew Bosworth, CMO Alex Schultz, and CPO Chris Cox. The current and former heads of Instagram and WhatsApp are also anticipated to testify. Additionally, the court will hear from witnesses representing rival social media companies such as Snap, TikTok, and Pinterest, highlighting the broad industry implications of this case.
Expert Analysis: FTC Case Strength
Rebecca Haw Allensworth, an antitrust law professor at Vanderbilt Law School, considers the FTC’s lawsuit “one of the stronger of the tech cases that have been brought in the last five years.” She suggests the strength derives primarily from evidence of Meta’s alleged anticompetitive intent behind acquiring Instagram and WhatsApp.
Zuckerberg’s 2012 Message Under Scrutiny
The FTC’s amended complaint emphasizes a 2012 communication from Zuckerberg to his then-CFO regarding acquiring social media startups like Instagram, stating: “The businesses are nascent but the networks are established, the brands are already meaningful and if they grow to a large scale they could be very disruptive to us.” This message is likely to be central to the FTC’s argument of anticompetitive intent.
Instagram and WhatsApp’s Growth Under Meta
At the time of Facebook’s $1 billion acquisition of Instagram, the photo-sharing application boasted 30 million users and no revenue. Today, Instagram’s user base is in the billions and it’s projected to account for over half of Meta’s US advertising revenue this year. While Facebook remains widely used, the platform has faced challenges in attracting younger demographics, an issue Zuckerberg has publicly acknowledged as a key focus for the current year.
WhatsApp’s Billion-Dollar Acquisition and Revenue Generation
WhatsApp had 450 million users when Facebook acquired it for $19.3 billion in 2014, then the largest startup acquisition on record. WhatsApp now contributes significantly to Meta’s revenue streams. Meta now reportedly generates over $10 billion annually from advertisements on Facebook and Instagram that direct users to engage with business accounts on WhatsApp, according to WhatsApp’s leader, Will Cathcart.
Existential Stakes for Meta
For Meta, resisting a forced separation from Instagram or WhatsApp is a matter of significant strategic importance. Instagram is Meta’s most culturally influential service, boasting a vast network of active content creators. WhatsApp is considered the world’s leading messaging platform. Both platforms are crucial distribution channels for Meta’s AI initiatives, viewed by Zuckerberg as the next major technological frontier. Despite allowing initial operational independence for both apps, spinning them off at this stage would pose substantial technical complications given their deep integration with Meta’s overall infrastructure.
Intent vs. Market Definition in Antitrust Law
While Zuckerberg’s intent isn’t a direct legal factor in determining antitrust liability, Allensworth posits it could act as a deciding factor if the judge perceives conflicting expert opinions on market dynamics. Conversely, Meta’s defense is expected to heavily emphasize challenging the government’s market definition—a common strategy in major antitrust litigation in recent years.
Defining the “Relevant Market”
To establish illegal monopolization, the government must demonstrate Meta possesses monopoly power within a “relevant market.” The FTC’s definition of “personal social networking services” excludes platforms like LinkedIn, YouTube, and TikTok, all of which Meta will likely argue are competitive forces. Meta is also expected to highlight its role in the growth and success of Instagram and WhatsApp, arguing its involvement was beneficial rather than anticompetitive.
Government’s Momentum and Judicial Precedent
The government benefits from recent momentum in antitrust enforcement. Last year, a DC judge ruled against Google, finding it held an illegal monopoly in online search, potentially setting a precedent for further rulings against Big Tech. Judge Amit Mehta’s ruling in the Google case could influence the current proceedings against Meta.
Judicial Discretion and Shifting Norms
Allensworth notes, “Finding liability in these cases does put the judge out on a limb a little bit, because the norm has been for so long to defer to how companies run their business, and especially to defer in the case of Big Tech. Once one judge goes out on that limb, it’s a little bit easier for the second judge to do it,” suggesting a potential shift in judicial attitudes towards Big Tech antitrust cases.