Meta’s Antitrust Trial: Will the FTC Break Up the Social Media Giant?

Over a week ago, Meta was called to Washington to defend itself in a lawsuit accusing the company of violating antitrust laws. While I must say, an article on a social media lawsuit is not part of my usual content, as part of the new generation, I feel I must express myself on the matter. 

First, let’s set the context: the U.S. Federal Trade Commission is basically accusing Zuckerberg of creating an illegal monopoly in a relatively young 21st-century market through the acquisitions of WhatsApp and Instagram which were once two very promising tech startups. As someone who grew up with both apps, I’ve discussed this ongoing trial with my peers and must say I find myself quite conflicted between both sides. Let’s dive into it:

Let’s start with the FTC’s arguments and, therefore, why they are suing Meta. At the core of this lawsuit is the development of the Facebook Camera app. Initially, Facebook created this app to compete with Instagram, but when they realized the competition was more threatening than anticipated, they simply acquired Instagram. This shift in strategy can be confirmed by the fact that Facebook Camera was abandoned after two years, with its functions ultimately being integrated into the main Facebook app. This suggests that Facebook saw Instagram not just as a promising startup, but as a genuine threat to its market position.

To counter these claims, Meta brought in former product manager Dirk Stoop, who stated that Facebook Camera served different purposes and that there was no real rivalry. Still, the outcome remains the same: after Instagram was acquired, Facebook Camera continued to be developed for only two more years before it disappeared.

But you might think: why are they calling Meta a monopoly if, in today’s time, we find apps that are just as popular and have a similar user base, such as TikTok and Snapchat? The FTC has countered that thought by claiming that these apps simply do not belong to the same category. Expert witness Professor Cliff Lampe claims that Instagram and Facebook belong to the category of personal social networking, a space in which they obviously dominate in this illegal monopolistic way. Now let’s define this category and market more precisely: Instagram and Facebook are essentially two apps whose sole purpose is to connect people. And when you think about it, it does make sense. Do you go on TikTok to connect with your family? No, you go on there to watch those short videos, which are quite addicting, I must say. Now, to defend themselves, Meta must simply prove that this category defined by the FTC is ridiculous and too narrow to even be considered.

Moreover, Zuckerberg presented facts to show the jury that his apps do face competition and that they do not dominate the market. For instance, when TikTok was banned, Facebook saw a 20% spike in users. Furthermore, growth slowed down following TikTok’s popularization, leading to a decrease in revenue. This suggests that while TikTok serves a slightly different purpose, it is still a competitor to Meta.

Now, let’s go back to Zuckerberg’s intentions when he acquired Instagram in 2012. Zuckerberg claimed that the acquisition was never meant to stifle competition, and some members of his team supported this by going as far as to say that, without the acquisition, these apps would have never developed into viable competitors on their own. 

The FTC sent an investor in WhatsApp, Jim Goetz, who reaffirmed that WhatsApp and Facebook were indeed potential rivals. Before its acquisition, WhatsApp was not just a mere startup but an actual successful app with notable growth. Goetz argued that if WhatsApp had grown on its own, it would have eventually entered the same social networking category that Meta dominates.(they were even already considering monetization through ads before the acquisition). Meta counters this by claiming they had to persuade WhatsApp’s team to implement major changes that allowed the app to evolve and make it into the app that is so popular today.

As for Instagram, some would venture to claim that Zuckerberg sabotaged its success following the acquisition. Allegedly, he withdrew members of Meta’s growth team who had been dedicated to supporting Instagram post-acquisition, and removed Instagram-Facebook integrations that only benefited Instagram.

This trial could lead to the breakup of Meta, the social media powerhouse, into separate companies. That’s why, if you own Meta shares, you should closely monitor this trial and stay alert

Now, while I do see the FTC’s point and would honestly agree that Meta does, in a way, dominate its field, I feel this case might be a little hard to win because it essentially relies on speculation. By that, I mean that to support these claims, the jury and the judge will have to visualize a world where those acquisitions were never made, and imagine what the social media market would look like today if Instagram, WhatsApp, and Facebook were all individual companies. Because, in the end, what the FTC reproaches Meta for is depriving users of the benefits of competition in a healthy market.