Meta Platforms has taken significant steps in the courtroom to challenge the U.S. Federal Trade Commission’s assertions that it operates as a monopoly. The forthcoming decision from a federal judge will determine whether the company should be split into separate entities.
The extensive trial, spanning seven weeks, concluded on Tuesday. Each party is now tasked with submitting written arguments within the next four months. U.S. District Judge James Boasberg will rule on whether Meta has unlawfully monopolized the social media market, particularly focusing on its past acquisitions of Instagram and WhatsApp, both of which were completed over ten years ago.
The FTC maintains that when Meta, previously known as Facebook, acquired Instagram in 2012 and WhatsApp in 2014, it chose to suppress competition rather than engage with it. The agency argues that these acquisitions were strategic moves to solidify Meta’s grip on a segment of the social networking market that prioritizes connections among friends and family. Should Judge Boasberg find in favor of the FTC and declare the company to be in violation of antitrust laws, Meta may face the divestiture of Instagram, WhatsApp, or both platforms.
This legal journey could take years to resolve. If Meta is victorious, the FTC is anticipated to initiate an appeal shortly thereafter. However, any ruling from Boasberg will solely address legal violations without immediately determining the subsequent course of action. Should he side with the FTC, a subsequent trial will delve into the repercussions of Meta’s business practices.
The timeline for Boasberg’s ruling remains uncertain, although it could be delivered by year’s end.
A spokesperson for Meta characterized the FTC’s case as lacking in substance, arguing that the trial underscored the competitive dynamics of the technology sector.
The FTC did not immediately reply to inquiries regarding the trial’s conclusion. However, a spokesperson for the agency previously indicated that Meta’s defense heavily relied on “primarily its own self-interested executives and paid experts.”
Potential Solutions
The FTC argues that a complete sale of both Instagram and WhatsApp is the only effective remedy for the alleged monopoly. Judge Boasberg, however, has the discretion to devise his own approach. He might determine that only one of the acquisitions was illegal and mandate the sale of just that service, or consider alternative solutions not previously contemplated by the FTC.
In recent weeks, attorneys for the FTC have rigorously questioned several Meta executives, including CEO Mark Zuckerberg, regarding the company’s acquisition strategies and its overarching role in the social networking space. They contend that Meta commands a significant share of a narrowly defined segment of the social networking market known as “Personal Social Networking Services,” which emphasizes interactions among friends and family.
Conversely, Meta asserts that its competitors encompass a broader array than merely traditional friend-and-family sharing, extending to platforms focused on short-form videos, e-commerce, and private messaging.
Various pertinent details emerged during the trial, including Zuckerberg’s past consideration of spinning off Instagram in 2018 to anticipate regulatory challenges. Nonetheless, the trial’s outcome is likely to hinge on the complex debate surrounding market definition.
Market Definition Issues
The FTC’s narrowly defined market may represent a vulnerability in its case, as noted by Rebecca Allensworth, an antitrust expert and professor at Vanderbilt University. “Their argument relies on a market definition that’s very small, closely aligned with what Facebook does,” she explained.
Nonetheless, Allensworth acknowledged that the FTC skillfully mitigated this weakness by asserting that Facebook offers an essential connection to friends and family that distinguishes it from other social media platforms. This became apparent during periods of heightened usage on holidays, suggesting that many users turn to the platform to connect with loved ones.
Meta’s legal team contends that the company’s services have evolved significantly since its inception and the acquisitions of Instagram and WhatsApp, expanding the competitive landscape. The FTC includes platforms like Snapchat as rivals but often overlooks competitors like TikTok and YouTube, as well as Apple’s iMessage.
Justin Teresi, an antitrust analyst from Bloomberg Intelligence, believes this evolution benefits Meta by altering the market dynamics in its favor.
Changing User Trends
According to Teresi, the focus on friends and family is no longer the primary usage of Meta’s products, noting an increase in recommended content from outside a user’s social circle. Although the FTC has demonstrated that sharing with friends and family still exists, it has struggled to show that this is the leading reason users engage with Meta’s platforms. “They’ve become victims of changing times,” he remarked.
Representatives from various tech firms, including Reddit, X, TikTok, and Pinterest, testified during the trial regarding the competition for user engagement and advertising revenue. While this competition is acknowledged, Teresi argues that it may not be as beneficial for Meta as anticipated.
“If the argument posits that the relevant market is competing for advertising dollars, then virtually any platform can be included, from TV to print media,” he stated.
The direction of Judge Boasberg’s ruling remains uncertain. Teresi estimates a 60 percent probability of victory for Meta in this trial. Furthermore, there is always a possibility that both parties could reach an agreement while awaiting the judge’s decision. Allensworth believes that although the FTC has constructed a strong case, she is unsure if it is sufficiently robust to warrant a breakup of Meta.
“Antitrust cases are notoriously challenging to win,” she commented. “This could genuinely go in any direction.”
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(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
