The Federal Trade Commission on Monday accused Meta of creating a monopoly that robbed the competition by buying startups that were on the road, and by launching a groundbreaking antitrust trial that could dismantle a social media empire that changed the way the world connects online.
In a packed courtroom in the District of Columbia, the FTC launched its first anti-trust trial under the Trump administration by claiming that Meta illegally solidified its social networking monopoly when Instagram and WhatsApp were small startups. These actions were part of a “buyer or boring strategy,” the FTC said.
Ultimately, the purchase combined the power of meta, robbing consumers of other social networking options and pulling away the competition, the government said.
“For over 100 years, American public policy has argued that businesses must compete if they want to succeed,” Daniel Matheson, the lead FTC litigator in the case, said in his opening remarks. “The reason we're here is because Meta broke the deal.”
“They decided that it was too difficult to compete and it would be easier to buy a rival than to compete with them,” he added.
Meta's lawyers denied allegations when opening the debate, rebutting the company's frequent competition with Tiktok and other social media platforms. The FTC approved the acquisition of Instagram and WhatsApp more than a decade ago, bringing the business world to unlock the merger, putting a dangerous precedent, the lawyer added.
“This case is a grab bag of FTC theory in the war with facts and war with law,” said Mark Hansen, the company's litigator and partner of the law firm Kellogg, Hansen, Todd, Figell and Frederick. “The facts would prove that all the FTC theories are wrong.”
The Trials – Federal Trade Commission vs. Metaplatform – poses the most consequential threat to the business empire of the company's co-founder Mark Zuckerberg. If the government is successful, the FTC could ask Meta to sell Instagram and WhatsApp, shift the way Silicon Valley does business and change the long pattern of big tech companies that snapped their younger rivals.
Still, legal experts warned that the FTC might be difficult to win. That's because we have to prove something that the government doesn't know. This is because Meta, previously known as Facebook, would not achieve the same success without the acquisition. Also, legal experts said it is very rare to unlock a merger that was approved several years ago.
“One of the hardest things antitrust laws are when industry leaders buy small potential competitors,” said Gene Kimmelman, a former senior official at the Obama Administration Department. Meta added, “I bought something that has no pan-out or integration integration. How is Instagram and WhatsApp different?
This effort continues a long-standing bipartisan pursuit to reduce the vast power that a small number of high-tech companies have beyond commercial, exchange of ideas, entertainment and political discourse. Despite attempts by tech executives to President Trump, his antitrust appointees have shown they will continue on the course.
The FTC's case against Meta is the third major technological antitrust lawsuit to be tried in the last two years. Last year, DOJ won antitrust laws against Google because it monopolized internet search. The federal judge will hear debate over the relief package, including a potential dissolution next week. DOJ also completed another exam against Google to monopolize AD technology, which is still decided by a federal judge.
The Justice Department has also sued Apple, with the FTC suing Amazon and accusing the company of anti-trust violations. These exams are scheduled to start next year.
The case for meta could affect 3.5 billion users. On average, 35 billion users log on to Facebook, Instagram, or WhatsApp multiple times a day to send news, shopping and text messages. With Facebook, Meta's flagship app, halting growth, Instagram and WhatsApp have attracted more users than they have in recent years.
FTC Chair Andrew Ferguson was in court to listen to the government's opening statement. Meta's Chief Legal Officer Jennifer Newsted and its Chief Global Affairs Officer Joel Kaplan were also present. Meta Chief Marketing Officer Alex Schultz sits at the litigator's table and serves as a company executive at trial.
The main character in this case is Judge James Boasberg (62), a senior federal judge. He has already fallen into the national spotlight for using powerful wartime laws to reject the Trump administration's efforts to immediately banish Venezuelan immigrants who were considered members of violent street gangs.
Judge Boasberg said he was not a user of the Meta app, but was familiar with Facebook Live, which is being featured in criminal trials. He received a memo when Matheson explained the government's definition of social networking and methodology to determine that meta is monopoly. He similarly focused on the meta-argument of these definitions.
The FTC claimed that Zuckerberg said in 2006 that Facebook was used to connect “real friends.” The FTC claims that Meta has dominated social networking since 2011, and that Snapchat is one of the only comparable platforms to Facebook and Instagram.
Meta rejected the FTC's definition of social networking and said it faces competition from Tiktok, LinkedIn, YouTube and other platforms. Hansen said it competed with the messaging app to share content between friends and family.
He said that more than half of all engagement on Facebook and Instagram is video. This makes Meta compete straight with the fast-growing short video app Tiktok. When Tiktok temporarily closed in January, Meta saw a surge in usage on Facebook, Instagram and YouTube.
“Meta has no monopoly,” Hansen said.
While it is projected to be an eight-week trial, the government and Meta are expected to tell a competing version of the company's 20-year growth story.
The FTC argument rests on Section 2 of the Sherman Antitrust Act of 1890, prohibiting companies from maintaining monopoly through anticompetitive practices.
The FTC accused the company of struggling to build a mobile app, as previously known, and that it was feared that Instagram would quickly outweigh its popularity. The FTC claimed it overpayed in 2012 when it bought Instagram for $1 billion.
In 2014, as WhatsApp grew, Meta offered to buy the company for $19 billion.
The FTC plans to highlight an email paper trial between meta-executives and, together with other evidence, claim that the company bought the startup because it was a threat.
In his opening remarks, Matheson mentioned a document that included what Zuckerberg described as a “smoking gun” in February 2012. In another email to former Chief Operating Officer Sheryl Sandberg in November 2012, Zuckerberg wrote:
The FTC lawyers have made sure Meta buys WhatsApp and doesn't get acquired by competitors like Google. Meta's WhatsApp acquisition was intended to build a “moat” around the company's monopoly in social networking, Matheson said.
The government is set up to call witnesses, competitors, venture capitalists, economists and media industry executives from Meta. Zuckerberg was expected to be called the first witness on Monday. The FTC said Instagram co-founders Sandberg and Kevin Systrom will testify this week.
