The US Federal Trade Commission (FTC) has accused Meta Platforms Inc., the parent company of Instagram and WhatsApp, of leveraging its acquisitions to create a “monopoly power,” a claim made during the opening of a significant trial that could potentially lead to the $1.5 trillion company being split. The trial in a Washington district court is considered an indicator of the Trump administration’s position on antitrust policies and its willingness to address monopolistic practices among major technology companies.
On Monday, Mark Zuckerberg, the founder of Facebook, was present in court, notably dressed in a formal dark suit and tie as opposed to his more common casual attire. FTC attorney Daniel Matheson presented the argument that Meta hindered competition from Instagram and WhatsApp by purchasing them in 2012 and 2014 for $1 billion and $19 billion, respectively. According to regulatory analysis, Meta has since attained “monopoly power,” with an 85% market share of user time spent on its applications. This claim was backed by internal communications from Zuckerberg.
Zuckerberg was shown in court having stated in a 2011 email that if Instagram, or if Google acquired Instagram, were to add features similar to Facebook, it could significantly impact Facebook. Despite acknowledging the competitive threat from Instagram in 2012, Zuckerberg defended Meta’s decisions, explaining the company’s strategic consideration to acquire different tools instead of solely building new ones, particularly as it was nearing its initial public offering.
Further evidence cited in court included a 2013 warning from Zuckerberg about WhatsApp’s potential market influence, where he foresaw it changing markets like the US, where SMS was still predominant. Matheson argued that Meta perceived these acquisitions as creating a protective “moat” against competition. If the court finds Meta guilty, it may be required to reverse its acquisitions of Instagram and WhatsApp, subject to the FTC’s remedies during the trial’s subsequent phase.
The trial is also pivotal as it represents an initial challenge under Andrew Ferguson, President Trump’s FTC chair known for his intentions to curb tech industry practices, including censorship accusations. Zuckerberg, who previously banned Donald Trump from Facebook, has reportedly been attempting to build rapport with the US president, evident from recent interactions.
On the first day, Zuckerberg testified, with appearances expected from Meta’s former Chief Operating Officer Sheryl Sandberg and executives from competing companies like TikTok, Snap, and YouTube. Matheson emphasized that Meta’s anti-competitive actions had resulted in escalated advertisements on Facebook and Instagram and significant privacy issues experienced by users. Additionally, according to an internal 2018 email from Zuckerberg, the platform allegedly attempted to hinder Instagram’s rapid expansion to prevent what was termed Facebook’s “network collapse.”
Meta’s legal representative, Mark Hansen, countered by arguing that the company had no monopoly and consistently faced competition. Hansen described the lawsuit as “misguided,” stretching current antitrust laws, and challenged the FTC’s market share figures by including TikTok and YouTube, claiming Meta’s share falls below 30%.
Hansen refuted the notion that TikTok does not compete with Instagram, using the boost in Facebook and Instagram users when TikTok faced outages as evidence. He also stated that improvements in Instagram and WhatsApp post-acquisition had led to significant user growth while maintaining the platforms’ free services. Antitrust specialists suggest that the FTC faces difficulties in proving its case, especially following an initial dismissal by Judge Boasberg, who later accepted a revised case in 2022. The FTC initially filed a lawsuit against Meta, then known as Facebook, over four years ago during President Trump’s first term.
