Meta faces off against FTC in antitrust case that could force divestment from Instagram, WhatsApp

The Federal Trade Commission’s (FTC) antitrust case against Meta went to trial on Monday, with company head Mark Zuckerberg being the first witness in the trial out of the US District Court for the District of Columbia. 

This is the first antitrust lawsuit undertaken by the FTC under the Trump administration, with the FTC accusing Meta of undertaking a "buy or bury" strategy when it comes to competitors.

The FTC argued in opening statements that Meta’s acquisitions of Instagram and WhatsApp deprived consumers of options and edged out competition. Daniel Matheson, the FTC’s lead attorney in the case, said during his opening statements, "For more than 100 years, American public policy has insisted firms must compete if they want to succeed. The reason we are here is that Meta broke the deal," the New York Times reported.

Matheson added, "They decided that competition was too hard and it would be easier to buy out their rivals than to compete with them."

The FTC argued that Meta has had a monopoly on social networking since 2011, with Snapchat being one of the only comparable platforms. 

Meta argued against the FTC’s definition of social networking and said that other companies such as LinkedIn, TikTok, and YouTube are competitors. "This case is a grab bag of FTC theories at war with fact and at war with the law. The facts are going to prove that the FTC’s theories are all wrong," said Mark Hansen, Meta’s lead litigator. "Meta has no monopoly."

Per the Associated Press, Matheson focused on one communication sent by Zuckerberg to colleagues expressing frustration about the lack of progress the company was making at the time on an app to compete with Instagram. Zuckerberg said, "The way I read this message is that I’m not happy about how we’re executing on that project."

Matheson asked whether this was because of Instagram’s rapid growth, to which Zuckerberg said, "That does seem to be what I’m highlighting."

A February 2012 email highlighted by Matheson in his opening statements saw Zuckerberg talking about the rise of Instagram and the importance of "neutralizing a potential competitor." A November 2012 email from Zuckerberg stated, "Messenger isn’t beating WhatsApp, Instagram was growing so much faster than us that we had to buy them for $1 billion."

Meta, then Facebook, bought Instagram in 2012 and WhatsApp in 2014, with the FTC arguing that both were bought well above the companies' market values at the time. The case could force Meta to divest from the two companies. 

Meta told the Associated Press in a statement, "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. More than 10 years after the FTC reviewed and cleared our acquisitions, the Commission’s action in this case sends the message that no deal is ever truly final. Regulators should be supporting American innovation, rather than seeking to break up a great American company and further advantaging China on critical issues like AI."

The FTC is accusing Meta of violating Section 2 of the Sherman Act by having "anticompetitive acts" that "constitute unlawful monopolization." 

The FTC said in a filing, "Facebook’s continued ownership and operation of Instagram and WhatsApp both neutralizes their direct competitive threats, and creates and maintains a 'moat' that protects Facebook from entry into personal social networking by another firm via mobile photo-sharing and mobile messaging. Facebook continues to monitor the industry for competitive threats and likely would seek to acquire any companies that constitute, or could be repositioned to constitute, threats to its personal social networking monopoly."