The last time the US Federal Trade Commission (FTC) was able to break up a major corporation was more than four decades ago, with the split-up of AT&T.
The blockbuster antitrust case against Meta — the parent company of Facebook, Instagram, and WhatsApp — has kicked off in Washington, DC, the United States.
Founder and CEO Mark Zuckerberg takes the stand for the second straight day today. The landmark case accuses Meta of taking over Instagram and WhatsApp before they could become competitors.
The suit is the culmination of a nearly six-year investigation into whether the social media giant broke US competition laws in acquiring Instagram and WhatsApp. At stake is the future of Meta’s $1.4 trillion advertising business and the prospect of having to spin off its hugely popular services into separate companies.
Zuckerberg takes political strategy
The federal court trial in Washington has dashed Zuckerberg’s hopes that the return of US President Donald Trump to the White House would see the government let up on the enforcement of antitrust law against Big Tech. Zuckerberg, the world’s third-richest person, has made repeated visits to the White House as he tried to persuade the president to choose settlement instead of fighting the trial.
As part of his lobbying efforts, Zuckerberg contributed to Trump’s inauguration fund and overhauled content moderation policies. He also purchased a $23m mansion in Washington in what was seen as a bid to spend more time close to the centre of political power.
But the US Federal Trade Commission (FTC) has shown no interest in letting up its push against Meta. Trump-appointed FTC Chairman Andrew Ferguson said in an interview on Fox Business that the agency would not let a Meta-like monopoly arise again. Ferguson’s push is not a far cry from the previous FTC Chairwoman, Lina Khan, who under former US President Joe Biden was known to be tough on Big Tech.
The case could see the Facebook owner forced to divest Instagram and WhatsApp, which have grown into global powerhouses since their buyouts.
The suit was originally filed in December 2020, during the first Trump administration, and all eyes were on whether the Republican president, on his return to the White House, would ask the FTC to stand down.
More than a decade of acquisitions
Central to the case is Facebook’s 2012 $1bn purchase of Instagram — then a small but promising photo-sharing app that now boasts two billion active users.
An email from Zuckerberg cited by the FTC showed him depicting Instagram’s emergence as “really scary” and adding that this was “why we might want to consider paying a lot of money for this”.
In his first day of testimony on Monday, Zuckerberg downplayed those exchanges as early talk before plans for Instagram came together.
But the FTC argues that Meta’s $19bn WhatsApp acquisition in 2014 followed the same pattern, with Zuckerberg fearing the messaging app could either transform into a social network or be purchased by a competitor.
Meta’s defence attorneys counter that substantial investments transformed these acquisitions into the blockbusters they are today.
They also highlight that Meta’s apps are free for users and face fierce competition.
FTC attorney Daniel Matheson said in opening remarks on Monday that “they decided that competition is too hard and it would be easier to buy out their rivals than to compete with them.”
Meta pushes back
Meta attorney Mark Hansen countered in his first salvo that “acquisitions to improve and grow an acquired firm” are not unlawful in the US, saying that is what Facebook did.
A key part of the courtroom battle will be how the FTC defines Meta’s market.
The US government argues that Facebook and Instagram are dominant players in apps that provide a way to connect with family and friends, a category that does not include TikTok and YouTube.
But Meta disagrees.
“The evidence at trial will show what every 17-year-old in the world knows: Instagram, Facebook and WhatsApp compete with Chinese-owned TikTok, YouTube, X, iMessage and many others,” a spokesperson told the news agency Reuters.
If the FTC is ultimately successful in its efforts to break up Meta, it would be the first time in 40 years that the agency would have forced a corporate breakup. In the early 1980s, the FTC forced telecommunications company AT&T to split apart.
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