Meta's biggest antitrust trial could force Zuckerberg to sell Instagram

The US Federal Trade Commission claims that Meta bought Instagram and WhatsApp to crush competition and establish an illegal monopoly in the social media market

A major antitrust case targeting Meta, the parent company of Facebook, is set to begin Monday in federal court in Washington. Meta will defend allegations from the Federal Trade Commission that it misused its market dominance to acquire Instagram and WhatsApp before they could develop into rivals. Since their respective acquisitions, both platforms have grown into global juggernauts.

 

The trial could ultimately force Meta to unwind its ownership of the two services — a potential corporate breakup that would echo the dismantling of AT&T’s telephone monopoly more than four decades ago.

 

Judge James Boasberg will oversee and rule on the trial. He is simultaneously presiding over a prominent case concerning White House directives to deport Venezuelans using wartime legislation. The lawsuit against Meta was initially filed in December 2020, during former President Trump's first term.

 

 

What is the FTC’s case against Meta?

 

The antitrust body contends that Meta’s acquisitions of Instagram in 2012 and WhatsApp two years later were part of a plan to inhibit competition and preserve monopoly control over the social media market. The FTC contends that Meta employed a ‘buy or bury’ approach to acquisitions, purchasing competitors it saw as threats or forcing them out of business entirely. Government lawyers plan to present a 2012 internal email where Zuckerberg described Instagram’s emergence as ‘really scary’, adding that is “why we might want to consider paying a lot of money for this”. Another internal email from CEO Mark Zuckerberg mentioned “it is better to buy than compete”. The FTC maintains this alleged behaviour violates federal antitrust laws.

 

Meta’s $19 billion WhatsApp acquisition in 2014 followed the same pattern, the FTC contends. “Unable to maintain its monopoly by fairly competing, the company's executives addressed the existential threat by buying up new innovators that were succeeding where Facebook failed,” the FTC says.

 

What is Meta’s response?

 

Arguing that the FTC’s lawsuit ‘defies reality’, Meta says it faces fierce competition from Elon Musk's X, TikTok, Snapchat and many other social media platforms. “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 company said in a statement.

 

Rationale for breaking the monopoly

 

The FTC argues that compelling Meta to reverse its acquisitions of both Instagram and WhatsApp is the only effective way to restore competitive balance to the marketplace. According to the government, separating these applications from Meta would enable smaller social media companies to compete more effectively for users and advertising revenue, thereby reducing Meta’s dominance in the sector. The regulatory body argues that a breakup would result in a more dynamic social media environment, where new companies can directly compete with Meta’s applications, ultimately leading to better quality services for all users. However, Meta argues that separating its platforms would reduce their integration and negatively impact the user experience.

 

Big Tech on trial

 

The case represents just one of five big tech antitrust actions recently initiated by the US government. Google is facing two cases and was found guilty of search-market dominance abuse last August, while Apple and Amazon are also heading to court. The trial will be seen as the first big test of President Donald Trump’s Federal Trade Commission’s ability to challenge Big Tech.