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The acquisition of Meta on Instagram and WhatsApp helped give them “exclusive power.” The US Federal Trade Commission told the court on Monday at the start of a blockbuster trial that could force the $150 million tech giant to dissolve.
The previous Washington District Court lawsuit is expected to still provide the clearest signal about the Trump administration’s stance on antitrust policies and its desire to take on major technology.
FTC lawyer Daniel Matheson claimed that Meta had hampered competition from Instagram and WhatsApp by purchasing for $1 billion and $1.9 billion in 2012 and 2014, respectively.
According to regulatory analysis, Meta had since built up a “exclusive power,” Matheson argued that 85% of the market share was spent on the app.
“Instagram can hurt us meaningfully,” and “it’s seriously threatening us,” Facebook founder Mark Zuckerberg said in a 2012 email presented as evidence of the FTC’s intention to adopt a “buy or burn” strategy.
Prior to the WhatsApp transaction, Zuckerberg warned in 2013 that messaging apps “can tip markets like the US where SMS is still a Primar (Y) platform.”
Meta knew that the deal could build a “moat” that would protect him from other challengers, Matheson said.
If convicted, Meta could be forced to unleash the WhatsApp and Instagram acquisitions, depending on the remedies the FTC is seeking in the second phase of the exam.
The trial is allegedly being brought closer to the US president, Zuckerberg, who once banned Donald Trump from Facebook, to try to relax Meta’s content policy rules by regularly visiting the White House.
Earlier this month, Zuckerberg appears to have lobbyed to secure a settlement between Meta and the FTC to avoid the exam.
The trial also marks the first significant test of a massive technology enforcement under Trump’s FTC chairman Andrew Ferguson, who was in court on Monday. He unveiled his plan to crack down on the industry accused of censorship.
Zuckerberg himself stood up Monday afternoon, but will also testify to former Meta’s Chief Operating Officer, Sheryl Sandberg and Tiktok rival leader Snap and Google’s YouTube.
Matheson argued that Meta’s anti-competitive behavior hurts consumers, pointing to “severely increased” ads on Facebook and Instagram and Meta’s “significant privacy failure over time.”
He also accused her of trying to stifle Instagram’s rapid growth in order to avoid “network collapse” by Zuckerberg in 2018, according to a secret email written by Zuckerberg to court.
“I just keep doing that. Insurance,” Metabos said in 2012 of Instagram. Meta said he has no intention of making Instagram hungry for resources.
Meta’s lawyer Mark Hansen said the company was “no monopoly” and never “insulated” from the competition.
The “misplaced” lawsuit “bears the limits of the country’s creaking antitrust precedent,” Hansen said.
Meta also challenged the market share presented by the FTC, saying that the share of meta spent by users on the app fell below 30% when Tiktok and YouTube were considered.
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Tiktok claims it doesn’t compete with Instagram for “no meaning,” and Hansen pointed out that in January it jumps to Facebook and Instagram users when Tiktok temporarily goes dark.
Meta has improved the quality of Instagram and WhatsApp, and has dramatically boosted the number of users since the acquisition, while still maintaining the service for free.
Anti-trust experts argue that the FTC is facing a difficult battle in the case, given that Judge Boasberg dismissed the initial complaint on the grounds that it was “legally inadequate” before accepting the 2022 renovated case.
Regulators first sued Meta (then Facebook) over four years ago during Trump’s first presidency.
