Facebook parent Meta Platforms faces a high-stakes trial in Washington starting on Monday on claims it built an illegal social media monopoly by spending billions of dollars to acquire Instagram and WhatsApp, in a case where U.S. antitrust enforcers seek to unwind the deals.
The acquisitions more than a decade ago aimed to eliminate competitors who could threaten Facebook’s status as the go-to social media platform for users to connect with friends and family, the U.S. Federal Trade Commission claims. It filed the case in 2020, during U.S. President Donald Trump’s first term.
The FTC is trying to force Meta to restructure or sell parts of its business. That means if the commission is successful, Instagram and WhatsApp could be hived off from Meta to become their own entities once again.
In a blog post on Sunday, Meta chief legal officer Jennifer Newstead called the case weak and a deterrent to tech investment.
“It’s absurd that the FTC is trying to break up a great American company at the same time the Administration is trying to save Chinese-owned TikTok,” she wrote.
The case poses an existential threat to Meta, which by some estimates earns about half of its U.S. advertising revenue from Instagram, while also giving the public its first real measure of how strongly the new Trump administration will follow up on its promises to take on Big Tech.
Meta has been making regular overtures to Trump since his election, nixing content moderation policies Republicans said amounted to censorship and donating $1 million USD to Trump’s inauguration. Meta CEO Mark Zuckerberg has also visited the White House multiple times in recent weeks.
U.S. President Donald Trump raised a record amount of corporate donations for his inauguration, millions of which were donated by CEOs of major tech companies like Google, Apple, Amazon and Meta. Andrew Chang explains the shift in Trump’s relationships with these industry leaders since his first term, and the symbolism of their proximity to the president.
Images provided by Getty Images, Reuters and The Canadian Press.
“The Trump-Vance FTC could not be more ready for this trial,” said FTC spokesperson Joe Simonson, adding, “We are blessed with some of the most hardworking and intelligent lawyers in the country who are working around the clock.”
WhatsApp and Instagram helped Facebook move its business from desktop computers to mobile devices, and to remain popular with younger generations as rivals like Snapchat (which it also tried, but failed, to buy) and TikTok emerged.
However, the FTC has a narrow definition of Meta’s competitive market, excluding companies like TikTok, YouTube and Apple’s messaging service from being considered rivals to Instagram and WhatsApp.
“The FTC already has the difficult task, whether it’s looking at 10 years ago or five years ago or today, of trying to define what is the market we’re talking about in a sufficiently narrow way that it can show Meta has a ton of power in that market,” said Paul Swanson, an antitrust attorney for the law firm Holland & Hart.
“And I do think that challenge has gotten harder as the years have gone by and we see more and more potential competitors in social media spaces.”
Zuckerberg expected to testify
Zuckerberg is expected to testify at the trial, where he will face questioning about emails in which he proposed acquiring photo-sharing app Instagram as a way to neutralize a potential Facebook competitor, and expressed worry that encrypted messaging service WhatsApp could grow into a social network.
Meta has argued in court papers that its purchases of Instagram in 2012 and WhatsApp in 2014 have benefitted users, and that Zuckerberg’s past statements are no longer relevant amid fierce competition from ByteDance’s TikTok, Google’s YouTube and Apple’s messaging app.
How users spend time on social media, and whether they consider the services interchangeable, will be core to the case. Meta will point to an increase in traffic to Instagram and Facebook during TikTok’s brief shutdown in the United States in January as evidence of competition, according to court records.
The FTC claims Meta holds a monopoly on platforms used to share with friends and family, where its main competitors in the United States are Snap’s Snapchat and MeWe, a tiny, privacy-focused social media app launched in 2016.
Platforms where users broadcast content to strangers based on shared interests, such as X, TikTok, YouTube and Reddit, are not interchangeable, the FTC has argued.
U.S. District Judge James Boasberg said in a ruling in November that while the FTC has enough evidence to move forward, the agency “faces hard questions about whether its claims can hold up in the crucible of trial.”
The trial is scheduled to stretch into July. If the FTC wins, it would have to prove at a second trial that measures such as forcing Meta to sell Instagram or WhatsApp would restore competition.
Instagram especially valuable to Meta
Losing Instagram in particular could prove catastrophic to Meta’s bottom line.
While Meta does not release app-specific revenue figures, advertising research firm Emarketer forecast in December that Instagram would generate $37.13 billion this year, a little over half of Meta’s U.S. ad revenue.
Instagram also generates more revenue per user than any other social platform, including Facebook, according to Emarketer.
Front Burner24:43The case against Google
The second of two major antitrust cases against Google wrapped up this week. Earlier this year, a judge found the company holds an illegal monopoly over the internet search market. Now the U.S. Department of Justice is arguing the same thing about its grip on online advertising. This is all part of a major push of antitrust litigation against tech companies by the U.S. government — Apple, Amazon and Meta are all facing similar cases.
What’s behind this push to crack down on these companies now? Would proposed remedies like breaking them up actually make a difference? And will the momentum survive the transition to a second Trump presidency? Paris Marx — author of the tech newsletter Disconnect and host of the podcast Tech Won’t Save Us — breaks it all down.
For transcripts of Front Burner, please visit: https://www.cbc.ca/radio/frontburner/transcripts [https://www.cbc.ca/radio/frontburner/transcripts]
WhatsApp to date has contributed only a sliver to Meta’s total revenue, but it is the company’s biggest app in terms of daily users, and is ramping up efforts to earn money off tools like chatbots. Zuckerberg has said such “business messaging” services are likely to drive the company’s next wave of growth.
The case is one of five where the FTC and U.S. Department of Justice accuse Big Tech companies of maintaining illegal monopolies.
Amazon and Apple are both being sued, and Alphabet’s Google is facing two lawsuits, including one where a trial is set to begin next week on the government’s bid to force Google to sell its Chrome browser.
