Meta Faces Antitrust Trial; Zuckerberg Defends Instagram, WhatsApp Acquisitions

Meta, the parent company of Facebook, Instagram and WhatsApp, is in deep water. The company is embroiled in a high-stakes U.S. antitrust trial where it has been accused of eliminating competition. The tech giant could be asked to sell its holding companies, setting up a landmark precedence in the technology sector. Notably, Meta bought competitors including Instagram (in 2012 for $1 billion) and WhatsApp (in 2014 for $19 billion), which has been described by regulators as a “buy-or-bury strategy”.

Mark Zuckerberg took the witness stand on Monday in the consequential trial, which was first brought to light in 2020.

What’s the Meta antitrust trial about?

Prepared by the Federal Trade Commission (FTC), if the regulator succeeds to convince Washington court in its favour, it could potentially lead to a split up of the $1.4 trillion company.

How has Meta responded?

During the testimony in the case, the FTC pointed to a 2011 email Zuckerberg sent saying: “Instagram seems like it’s growing quickly.” The following year, he sent another email saying the company was “so far behind that we don’t even understand how far behind we are… I worry that it will take us too long to catch up”.

In reply, Zuckerberg said that the emails were “relatively early” conversations about buying the app and that since its acquisition, Meta has made several changes to the platform.

FTC’s lead lawyer, Daniel Matheson, questioned Zuckerberg about the “core value proposition” of Meta, a question which could turn out core to the regulator’s strategy of showing that the social media giant engaged in monopolistic behaviour in the “personal social networking” market, which the FTC contends consists of just four platforms — Instagram and WhatsApp, Snapchat and a much smaller app called MeWe. By including the two Meta-owned services, the FTC reiterated that the company owns nearly 80% of active users in the market. However, Zuckerberg contended that his platforms have evolved from friends and family, and toward “more of a broad discovery-entertainment space”.

What's FTC's case against Meta?

FTC alleged that Meta had maintained its social networking monopoly via years of anticompetitive practices.

As per FTC’s complaint, Facebook targeted potential competitive threats to its dominance. Notably, Instagram came at a time when users of personal social networking services were migrating from desktop computers to smartphones. The complaint alleged that “Facebook executives, including CEO Mark Zuckerberg, quickly recognised that Instagram was a vibrant and innovative personal social network and an existential threat to Facebook’s monopoly power”.

FTC alleged that Facebook (since rebranded to Meta) previously tried to compete with Instagram on the grounds of improving its own offerings, but ultimately chose to buy Instagram rather than compete with it. “Facebook’s acquisition of Instagram for $1 billion in April 2012 allegedly both neutralises the direct threat posed by Instagram and makes it more difficult for another personal social networking competitor to gain scale,” the complaint said.