Meta Faces Antitrust Lawsuit Over Its Acquisitions Of Instagram And Whatsapp Amidst Broader Tech Industry Crackdown

Background

The lawsuit was originally filed against Facebook (which later changed its name to Meta) in 2020.The FTC claims that Meta bought Instagram in 2012 and WhatsApp in 2014 as part of a plan to eliminate competition and establish an illegal monopoly in the social media market. The government says Meta followed a "buy or bury" strategy, either acquiring companies it saw as threats or forcing them out of business. The FTC is in possession of a 2012 email in which CEO Mark Zuckerberg stated that acquiring Instagram would help "neutralize a potential competitor," and it plans to present this as key evidence in the case. The FTC argues that this behavior violates U.S. antitrust laws. It also claims that Meta enacted policies designed to make it difficult for smaller rivals to enter the market and to "neutralize perceived competitive threats," especially with the shift from personal computers to smartphones.The FTC further alleges Meta has used its dominant position to suppress the growth of rival companies by restricting how their apps could work or integrate with Meta's platforms.The FTC is seeking the court order against Meta to undo its acquisitions of Instagram and WhatsApp to restore competition in the social media marketplace. The agency argues that separating these apps from Meta would empower smaller social media companies to compete for users and advertising revenue, and reduce Meta's dominance in the industry.If the judge accepts FTC's arguments and orders Meta to divest from Instagram and WhatsApp, it could severely impact the company's advertising business. Instagram alone is estimated to generate about half of Meta's advertising revenue in the U.S.

Meta's counsel, in their court filings, stated that the acquisitions of Instagram and WhatsApp were approved by regulators more than a decade ago at the time of their respective purchases. They submitted that Meta is being unfairly punished for being an innovative and aggressive tech company. They argued that the FTC must prove that Meta currently holds monopoly power in the relevant market it has defined, not just that it may have had such power in the past.Judge James Boasberg, last year had denied Meta's request for a summary judgment and ruled that the case must go to trial.The trial is expected to last up to two months, with Mark Zuckerberg scheduled to remain on the stand until the end of the week.

The lawsuit is in a longline of series of cases filed against big tech companies for allegedly abusing their dominant.Several major tech companies are facing legal challenges in the U.S. Google is dealing with two lawsuits—one over its alleged monopoly in search, where a judge has already ruled in favor of the government, and another targeting its advertising business, with a decision expected soon. Federal prosecutors are pushing for Google to sell Chrome, while the company plans to appeal. Amazon is being sued by the FTC for allegedly pressuring smaller sellers on its platform, with a trial scheduled for next year. Apple is contesting a lawsuit filed by federal authorities claiming its ecosystem makes it hard for users to switch devices and has requested the case be dismissed. Meanwhile, federal agencies are also monitoring the AI sector, with prosecutors investigating Nvidia and the FTC reviewing Microsoft's partnership with OpenAI.

Case Title: Federal Trade Commission v. Meta Platforms, Inc.