Background and Context
Meta Platforms, formerly known as Facebook, is currently embroiled in a high-stakes federal court case in Washington, D.C., accused of illegally constructing a social media monopoly by spending billions on the acquisitions of Instagram and WhatsApp. The U.S. antitrust authorities aim to dismantle these deals.
According to the Federal Trade Commission (FTC), these acquisitions, made over a decade ago, were intended to eliminate emerging competitors that could threaten Facebook’s status as the primary social networking platform for users to connect with friends and family.
FTC’s Case Against Meta
The FTC, under the Trump administration in 2020, initiated this case. They seek to compel Meta to restructure or divest parts of its business, including Instagram and WhatsApp. However, Meta’s General Counsel, Jennifer Newstead, dismissed the case as weak and discouraging to tech investments in a blog post.
“It’s absurd that the FTC is trying to break up a major American company while simultaneously attempting to save TikTok, a Chinese-owned app,” Newstead wrote.
Implications for Meta
The lawsuit poses an existential threat to Meta, which reportedly generates roughly half of its U.S. advertising revenue from Instagram. It also marks the new Trump administration’s resolve to confront big tech firms.
Meta has maintained a close relationship with Trump since his election, adopting policies that Republicans considered non-censorial and donating $1 million to Trump’s inauguration. Meta CEO Mark Zuckerberg has also visited the White House multiple times recently.
The Success of Instagram and WhatsApp
Mark Zuckerberg testified that Instagram would have struggled to grow without Facebook and WhatsApp lacked ambition. He argued that these acquisitions were necessary to address technical, organizational, and legal challenges.
Regarding Instagram’s success, Zuckerberg acknowledged that without Facebook’s support, achieving its current 2 billion global users would have been difficult but not impossible.
As for WhatsApp, Zuckerberg admitted its founders lacked ambition, though he praised its technical prosperity.
Competition in the Tech Industry
Meta faces stiff competition from Google, YouTube, and the rapidly growing TikTok. Zuckerberg highlighted that user attention is a fiercely contested commodity in the digital realm, explaining Meta’s development of “Reels” to compete with TikTok.
FTC’s Market Definition
The FTC argues that Meta’s services fall under “personal social networks,” enabling users to stay in touch with family and friends. They claim that user experience has degraded due to excessive advertising.
Other Tech Giants Under Scrutiny
Google was recently found guilty of abusing its dominant position in online search markets. Apple and Amazon also face lawsuits, indicating a broader trend of antitrust actions against major tech companies.
