Social networks surged in popularity shortly after Mark Zuckerberg co-founded Facebook in a Harvard dorm room in 2004. About a decade later, the company went through another round of explosive growth after buying small rivals Instagram and WhatsApp and solidifying its place on social media.
On Monday, U.S. District Court Judge James Boasberg of the District of Columbia begins to consider a groundbreaking monopoly case involving a company that is currently called the Meta.
The case – Federal Trade Commission vs. Metaplatform – is the first to try to develop US antitrust theory to include what regulators call “purchase or fill” strategies. The FTC broke the law by acquiring a new competitor to maintain its monopoly in social networking. Regulators are trying to force Meta to sell Instagram and WhatsApp.
Meta faced plenty of competition on social media on Tiktok, Snap, Reddit and LinkedIn, which refuted the regulator's approval of the acquisition at the time. The company has also not given up on solving the case. Earlier this month, Zuckerberg was in the White House and tried to persuade the Trump administration to avoid trial.
The outcome of what is expected to be a multi-week trial, the first major technology case charged by the Trump administration, could reconstruct the US antitrust landscape as businesses face intense scrutiny of mergers and acquisitions. Government victory could also result in the Ripple effect of Silicon Valley. In Silicon Valley, startups are acquiring banks for lucrative acquisitions by large companies to pay.
Still, the FTC is facing a difficult fight to prove its case, legal experts said. The government's legal debate depends on showing that the meta is not so dominant and that it is not dominant unless you have Instagram or WhatsApp.
“We've seen a lot of effort and we've seen you,” said Gene Kimmelman, a former senior official in the Department of Justice's antitrust division. “Winning against the government will allow consumers to have more options and opportunities to cross social media platforms without joining Facebook.”
The lawsuit has received bipartisan support and has been part of the most aggressive trust-in commissioning efforts by federal regulators since GILDED AGES, with Google, Meta, Amazon and Apple facing questions about their powers to control the way consumers shop, find information and communicate.
Last year, the Justice Department won an antitrust law against Google to monopolize internet searches and a trial to determine how to improve the monopoly is scheduled to begin on April 21st. Google is also awaiting a judge's decision in another trial on allegations that it pushed illegal competition in the AD technology market.
DOJ also sued Apple, claiming that the tight knitting system of devices and software makes it difficult for consumers to leave. And the FTC has sued Amazon and accused them of illegally protecting monopolies in online retail. These cases are scheduled to go to court next year.
The tech industry is closely watching the Metatrial, one of the first major signals of how aggressively President Trump may be suppressing the most powerful tech companies. The incident began under his first administration before handing off to FTC Chairman Lina Khan in 2021.
Now, Andrew Ferguson, who is the choice to lead the agency, is taking the baton. He warned against the concentration that Meta holds. He is also motivated by Republican Republican views that tech platforms have censored content, particularly conservative voices.
“We're not going to take our feet off the gas,” Ferguson said in an interview with Bloomberg last month.
For Meta, even the idea of stealing Instagram and WhatsApp is amazing. The company bought WhatsApp for $1 billion in Instagram in 2012 and $19 billion in 2014. At the time of the transaction, there were few apps – Instagram had just 30 million users and 13 employees, while WhatsApp had 450 million users and 50 employees. Since then, both have become important to the meta, growing and engaged by users faster than Facebook.
The trial will feature approximately seven hours of testimony from Star witness Zuckerberg, former Chief Operating Officer of Meta, along with Instagram and WhatsApp founders.
In Meta, there is an army of the most expensive and experienced litigators who argue for its defense, led by Mark C. Hansen, a partner of Kellogg, Hansen, Todd, Figell and Frederick. Meta will argue that the rapid rise of video sharing site Tiktok, particularly shows healthy competition in the market.
“We believe the evidence at the trial shows that the acquisition of Instagram and WhatsApp is suitable for competition and consumers,” said Chris Sgro, spokesman for Meta. “The committee continues to incorrectly assert that transactions are not truly final and that businesses will be punished for innovation.”
The FTC first sued Meta along with a similar lawsuit brought by 46 states in December 2020. The legal debate of the agency rests on section 2 of the Sherman Antimonopoly Act of 1890. This specifies that it is illegal to maintain monopoly using anti-competitive practices.
To support that case, the FTC wrote a 2008 email from Zuckerberg that “it's better to buy than a competition,” and wrote a 2012 memo that stated that his motivation to buy Instagram was a “potential competitor.”
Judge Boasberg, trapped in a controversial court battle with the Trump administration over the use of powerful wartime laws to immediately oust Venezuelan immigrants, will decide the case. In a recent pretrial tutorial, the judge said he never had a personal Facebook or Instagram account.
Judge Boasberg rejected the FTC's first case in June 2021, saying that agents needed to provide a stronger definition than the social media market, and how Meta has come to monopolize it. He accepted the case of the refill version in January 2022, but warned that it was far from a slam dunk.
In a ruling on Meta's motion dismissing the lawsuit last year, Justice Boasberg said the FTC “is facing harsh questions about whether its claims can hold the crucible of trial.”
“Indeed, that position sometimes carries the country's creaking antitrust precedent on their limits,” he added.
Legal experts say the case is difficult to prove, as it depends on determining intentions by executives in a very different internet age over a decade ago. The transaction was approved by regulators at the time, and years of integration between apps means they share much of the same internal system and data.
“We ask the judges to determine whether Meta was trying to kill the competition or whether he made a good bet by winning good fortune,” said Jennifer Huddleston, a senior fellow at the Cato Institute, a think tank. “It assumes a counterfactual that we cannot know.”
