Mark Zuckerberg’s well-timed acquisitions of Instagram and WhatsApp, in 2012 and 2014 respectively, helped his social media empire reach billions of people.
More than a decade later, the US Federal Trade Commission is targeting those deals in a landmark antitrust lawsuit set to go to trial Monday, alleging that the acquisitions were illegal, should never have been approved and should be broken up.
The FTC argues that Meta’s purchases of Instagram and WhatsApp are “killer acquisitions” that prevented those companies from competing and it was a mistake to have allowed those deals years ago. To support its case, the FTC will argue that the quality of Meta’s apps has declined, most noticeably with increased ads and weakened privacy protections.
The FTC’s challenge, which will kick off before US District Judge James Boasberg in Washington, poses an existential threat to Meta’s dominance. A breakup would disrupt some of the world’s most popular digital products, undo the market leader’s years of integration between the apps and Facebook, and raise serious questions about how the government evaluates and approves deals.
Given Meta’s market cap of $1.3 trillion (roughly Rs. 1,11,85,447 crore), and its reliance on advertising revenue from Instagram, a breakup risks erasing hundreds of billions of dollars in market value.
The closely watched trial will include a parade of executive witnesses, including Zuckerberg and former Chief Operating Officer Sheryl Sandberg.
Meta said in a statement it’s “confident the evidence will show that the Instagram and WhatsApp acquisitions have been good for competition and consumers.” The company also blasted the FTC for challenging the deals more than a decade later.
“The Trump-Vance FTC could not be more prepared for this trial,” said FTC spokesman Joe Simonson. “This agency is staffed with some of the most talented and hardworking attorneys in the country.”
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Police Competition
The case will test the government’s ability to police competition in the fast-moving tech sector, which has evolved significantly since the FTC’s lawsuit was filed during the first Donald Trump administration. Since then, billionaire Elon Musk purchased Twitter Inc., TikTok became one of the most dominant social media apps in the world, and Meta launched rival products to compete with both of them.
Zuckerberg has spent the past several months appealing to the Trump administration with looser content rules and the elimination of fact-checking efforts and DEI initiatives. Privately, he’s lobbied for Trump to intercede and settle the case, the Wall Street Journal reported, though experts believe Trump is unlikely to intervene at this stage.
That doesn’t mean Trump couldn’t weigh in later. If Meta loses, it’s possible that Trump could pressure the FTC commissioners to settle during an appeals process, experts said. Trump already exerted his power over the agency by firing the commission’s two Democratic members in March. Those commissioners are fighting their dismissal in court, while the agency is being run by the two remaining Republicans.
“It would be in those commissioners’ minds that if he can just up and fire the two Democrats they could certainly be fired, too,” said Jennifer Rie, Bloomberg Intelligence senior litigation analyst. “So if they don’t do his bidding, or go up against him, they risk being fired.”
“Gearing Up”
FTC Chair Andrew Ferguson told Bloomberg TV last month that the agency is “gearing up for trial,” but told reporters in Washington last week that he would obey lawful orders if Trump directed him to drop the case, adding that he would be surprised if that happened.
A week after the Meta trial starts, two floors above Boasberg’s courtoom, Alphabet’s Google will argue why it shouldn’t face a breakup after a judge found it illegally monopolized the online search market. The cases show the new administration isn’t backing down on major antitrust cases filed against tech giants under Trump’s first term.
A final decision on the Meta case will hinge on how social media is defined, and whether Meta dominates that market. The FTC will focus on how people communicate with friends and family — what it calls the “personal social networking services” market, which it claims is comprised primarily of messages and media shared between close contacts.
The agency believes only Snap Inc.’s Snapchat and a much smaller company called MeWe compete with Meta. It also highlights a number of now-defunct competitors, including MySpace.
The trial will reveal hundreds of emails and other internal communications about the company’s growth strategy over the last 15 years, including Zuckerberg’s stated reason for the Instagram deal cited in the FTC complaint: “It is better to buy than compete.”
Meta will disagree and argue that it faces intense competition from myriad competitors beyond Snap, including Elon Musk’s X, TikTok and YouTube, which is owned by Google. Meta has spent years replicating popular features from other platforms, a strategy it will argue demonstrates a deliberate effort to keep up with consumer needs in a cutthroat market.
While the FTC maintains that Instagram and TikTok aren’t social networking competitors, Meta plans to prove they compete by highlighting that TikTok’s temporary ban in January led to a spike in usage for Meta’s products. The FTC will be allowed to use testimony from TikTok and Pinterest that speaks to its version of the “competitive landscape.”
High-Profile Cases
Boasberg admitted during a pre-trial product demo last week he’s not an expert in Meta’s offerings. He said that he’s never had an account with the company, and asked “what’s the point” of clicking “like” on a post? But he doesn’t shy away from high-profile cases. Boasberg is also overseeing ongoing litigation over the government’s controversial deportations to Venezuela, which have led to public rebukes from Trump, in addition to a case involving top US officials and White House advisers discussing imminent military action in Yemen via a Signal chat.
A resolution on Meta may be years away. Boasberg will first decide whether Meta violated the law with its acquisitions. If he finds the company did, a second phase of hearings on how to fix the market would take place.
The case isn’t Meta’s only tussle with the FTC. The FTC is also accusing Meta of violating the terms of a 2019 privacy settlement under which the company paid a record $5 billion penalty to resolve allegations it violated an earlier agreement focused on its data security practices. Meta is also facing a related investor lawsuit in Delaware later this summer.
Many on Wall Street have been expecting a settlement in the antitrust case, according to Shweta Khajuria, a Wolfe Research LLC analyst, who said in an interview that investors are hopeful Trump helps influence the outcome now that his relationship has improved with Zuckerberg.
“I don’t think investors are bracing for a breakup,” Khajuria said. “A settlement would be a more favorable outcome than stretching this out, which leaves an overhang on the stock.”
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