FTC Lawyer Claims Meta Acquired Instagram and WhatsApp to Eliminate Competition
Zuckerberg Expected to Testify in High-Stakes Antitrust Trial
WASHINGTON: Meta Platforms, the parent company of Facebook, acquired emerging competitors Instagram and WhatsApp after failing to compete effectively with them, a lawyer for the U.S. Federal Trade Commission (FTC) argued during a major trial in Washington on Monday. The FTC is attempting to reverse these acquisitions, claiming the moves were part of a strategy to stifle competition in the social media space.
FTC attorney Daniel Matheson contended that Meta’s actions created long-standing barriers to entry, helping the company maintain its dominance in the industry. “Consumers are left with no real alternatives,” he said during the proceedings.
The case, which dates back to President Donald Trump’s first term, argues that Meta’s purchases of these platforms a decade ago were designed to eliminate competition from potential rivals in the social media sector, where users engage with friends and family.
The FTC’s aim is to force Meta to restructure its business, possibly requiring the company to sell Instagram and WhatsApp.
This lawsuit poses a significant risk to Meta, which derives a substantial portion of its revenue from Instagram. It also represents an early test of the Trump administration’s approach to regulating Big Tech.
Meta, which has been in frequent contact with Trump’s administration, has made significant shifts, including rolling back certain content moderation policies and making donations to Trump’s inauguration fund.
Meta CEO Mark Zuckerberg has made several visits to the White House in recent weeks.
FTC spokesperson Joe Simonson emphasized the agency’s readiness for the trial, stating that the lawyers had been preparing intensively for this moment.
However, Meta’s Chief Legal Officer, Jennifer Newstead, criticized the case, calling it a hindrance to tech innovation. In a blog post on Sunday, she argued, “It’s absurd for the FTC to target a successful American company while the administration is working to protect Chinese-owned TikTok.”
Zuckerberg’s Testimony Expected
Zuckerberg is anticipated to testify in the case, where he may be questioned about emails where he suggested acquiring Instagram to neutralize a potential competitor and expressed concerns over WhatsApp’s potential to become a social network.
Meta maintains that its acquisitions of Instagram in 2012 and WhatsApp in 2014 have brought benefits to users, and they argue that Zuckerberg’s earlier statements are outdated due to the rise of competitors like TikTok, YouTube, and Apple’s messaging services.
The core of the trial will focus on how users engage with social media platforms and which services they view as interchangeable. Meta argues that the surge in Instagram and Facebook usage during a temporary TikTok shutdown in January 2023 demonstrates direct competition in the space.
The FTC, on the other hand, contends that Meta holds a monopoly on platforms designed for connecting with friends and family, with competitors such as Snapchat and the small privacy-oriented app MeWe being the only U.S.-based alternatives. It argues that platforms like TikTok, YouTube, Reddit, and X (formerly Twitter) are not directly interchangeable with Facebook and Instagram.
In a ruling last November, U.S. District Judge James Boasberg acknowledged that the FTC faces significant challenges in proving its case in court. The trial is expected to last until July, and should the FTC prevail, it would still need to prove in a subsequent trial that forcing Meta to divest Instagram or WhatsApp would restore market competition.
Impact on Meta’s Finances
Losing Instagram could have severe financial consequences for Meta. According to advertising research firm Emarketer, Instagram is projected to generate $37.13 billion in revenue this year, accounting for over half of Meta’s U.S. ad revenue. Instagram also outperforms other platforms in terms of revenue per user.
Although WhatsApp currently contributes only a small portion to Meta’s revenue, it is the company’s largest app by daily active users. Meta is working to monetize WhatsApp through new features like business messaging and chatbots, which Zuckerberg has identified as key to driving the company’s next phase of growth.
A Wider Battle Against Big Tech
This case is one of several in which the FTC and the U.S. Department of Justice are challenging Big Tech companies over alleged monopolistic practices. In addition to Meta, other tech giants like Amazon, Apple, and Google are also facing antitrust scrutiny.
