In a pivotal antitrust trial faced by Meta, led by Mark Zuckerberg, the focus shifted significantly towards the role of TikTok as a competitor rather than the operations of the tech giant itself. Throughout a three-day testimony in a U.S. federal court in Washington, Zuckerberg emphasized that TikTok, owned by Chinese company ByteDance, had evolved into a substantial competitor. This narrative aimed to counter the U.S. Federal Trade Commission’s (FTC) accusations that Meta maintained an illegal monopoly. Should these allegations be proven, the repercussions for Zuckerberg’s enterprise could surpass any commercial threats the company currently encounters.
If Meta loses the lawsuit, it might be compelled to dismantle its $1.5 trillion conglomerate by divesting Instagram and WhatsApp. Such an outcome is something Zuckerberg has previously pledged to vigorously oppose. Conversely, a victory would signify a major triumph over a regulatory body that has persistently scrutinized big technology firms, including recently targeting Amazon with lawsuits.
Meta found itself in court after unsuccessful attempts to negotiate a settlement with the FTC. Sources familiar with the negotiations stated that while the FTC proposed a $30 billion settlement, Meta countered with $450 million and later increased its offer to $1 billion, against the FTC’s minimum demand of $18 billion, leading to the current legal proceedings.
Central to the FTC’s case is the assertion that Meta pursued a “systematic strategy” to eliminate competitors, notably through acquiring Instagram and WhatsApp in 2012 for $1 billion and in 2014 for $19 billion, respectively. FTC lawyers presented evidence suggesting that Zuckerberg perceived these emerging applications as competitive threats, including a collection of emails. In 2012, Zuckerberg agreed with the notion that acquiring Instagram could help “neutralize a competitor,” and expressed a desire to use mergers and acquisitions to “build a competitive moat around us on mobile and ads.”
For these tactics to be deemed illegal, the FTC must first establish that Meta holds a monopoly, a point some antitrust experts suggest could be challenging. Both Zuckerberg and former Meta Chief Operating Officer Sheryl Sandberg underscored TikTok’s remarkable expansion to over a billion users worldwide during their testimonies.
Paul Swanson, head of antitrust and competition practice at Holland & Hart, remarked that past statements by Zuckerberg and Sandberg, although perhaps damaging, held little value in proving Meta’s current monopoly status. He noted that their explanations had effectively demonstrated that Meta and TikTok are competitors and alternatives in the minds of most users.
The FTC is tasked with proving consumer harm, typically represented by a monopolist inflating prices. However, since Meta’s services are offered for free, the agency argues that consumers have suffered from a compromised user experience due to Meta’s dominance, resulting in ad-filled feeds and subpar privacy protections.
The FTC needs to persuade Judge James Boasberg, overseeing the trial, that Meta has dominated a “personal social-networking” market centered around friends-and-family interactions, excluding TikTok and Google’s YouTube. During previous filings, Boasberg indicated potential openness to the FTC’s arguments, which suggested that other applications might not serve as reasonable substitutes for personal social networking.
Despite these challenges, Zuckerberg refuted the FTC’s market definition in court. He pointed to the company’s expedited development of Reels—short-form videos—in response to TikTok’s rapid growth. He described TikTok as potentially the most significant competitive threat to Instagram and Facebook in recent years. Furthermore, Zuckerberg contended that the acquisitions of WhatsApp and Instagram were aimed at accelerating growth, highlighting the significant increase in users following these acquisitions.
The FTC presented a 2013 email in which Zuckerberg identified messaging apps as primary competitors, highlighting the strategic importance of purchasing WhatsApp. In another email, he suggested that acquiring Instagram was a necessity due to its rapid growth compared to Facebook Messenger and WhatsApp. Lee Hepner, a senior legal counsel at the anti-monopoly nonprofit American Economic Liberties Project, noted that Zuckerberg’s current testimony seems to contradict his earlier statements made during the acquisitions.
A notable piece of evidence was a 2018 email from Zuckerberg where he considered the potential requirement to spin off Instagram due to antitrust pressures, presciently envisioning the situation he faces today. He admitted there was a “non-trivial chance” of being compelled to spin out Instagram and perhaps WhatsApp within the next five to ten years due to increasing calls for the breakup of major tech companies.
