In September 2006, Facebook CEO Mark Zuckerberg explained what made his social network special.
“Facebook is about real connections with real friends,” he wrote in a company post.
Twenty years later, the explanation is at the heart of Zuckerberg's groundbreaking antitrust trial against the social networking empire, now known as Meta, which holds back illegally held competition. Essentially, the trial raised the question whether social networking is merely about connections with friends and family, or more.
The Federal Trade Commission, which is prosecuting the case, has sought to narrowly define social networking as a service that brings together friends and family. Under that definition, Meta truly only competes with Snap, the maker of Snapchat, where the size and user runs. But Meta claims to be counted as all social media companies, especially Tiktok and YouTube.
“My friends part has dropped considerably,” Zuckerberg testified at his trial last month, disregarding his words since 2006.
The opposite definition of social media in this case – Federal Trade Commission vs. Metaplatforms – shows how much social networking has evolved over the decade and how slippery it has become. Meta has expanded its Facebook roots to become a message board for college students, with many new companies developing similar products, emulating common features such as the “Like” button and news feed.
During the first four weeks of the trial, a parade of social media executives from companies like Reddit, Pinterest and LinkedIn did little to clarify the definition of social networking. They admitted they were all competing for the same users, but in many cases they offered very different products.
Defining where meta fits the social media situation would be the first and most important decision for Judge James E. Boasberg of the U.S. District Court for the District of Columbia, which is leading the trial.
It was “not going for a walk in the park,” Judge Boasberg wrote in his opinion late last year.
In this case, we look into whether Meta bought Instagram for $1 billion in 2012 and competed in an illegal $19 billion competition on WhatsApp in 2014. Judge Boasberg's decision will have a broad impact on the high-tech market as the industry faces years of bipartisan push to curb Silicon Valley's power and grasp speech, entertainment, commercial and computing.
If he sids with a government that is about to dissolve the meta, the decision could thwart the greedy appetite of the biggest tech companies buying smaller rivals. It will shake up the economy of start-ups. Many founders rely on larger players to allow investors to pay cash.
“The world we are in is becoming more complicated, so that's a key case. So if the FTC wins, there could be more aggressive antitrust enforcement,” said Daniel Rubinfeld, former Deputy Justice Department Attorney General, who worked on the government's antitrust case against Microsoft over 20 years ago.
Under most antitrust laws, competitive markets are easy to define, legal experts said. Prices are used as the basis for assessing the power and impact of a company on competition. This includes, for example, mergers or anti-competitive actions that boost prices of airline tickets and appliances.
However, internet companies like Meta offer free services to consumers, turning the case into a new legal argument.
In his opening statement, Daniel Matheson, the government's chief attorney in the case, accused Meh of “the monopoly of US personal social networking services.”
Matheson argued that Meta's network, which knew each other, was key to the company's growth and attracted advertisers who were interested in promoting their products in close connections.
Meta fought back by saying they were primarily competing for attention from users who scrolled through short-format videos on YouTube and Tiktok. Its top litigator Mark Hansen said the company went into “crisis” mode when Tiktok became available in the US in 2018.
On Thursday, one of Meta's lawyers asked Instagram director Adam Mosseri if the app resembles Facebook and Tiktok.
“I put Instagram between the two of them and it's way closer to Tiktok,” he said. Instagram started out as an app that connects friends, he added, but users now rely on more for entertainment.
Clouding the photos, parades of executives from other social media companies have done little to define the market for the industry.
“YouTube and Instagram are Tiktok's most important competitors,” according to an internal Tiktok document released in 2021, published by Meta's lawyers.
When asked about rivalry, Tiktok's business manager Adam Presser lowers the idea by saying that the app works differently: “We don't think of it as a social app.”
YouTube is primarily used for entertainment, and it is rare for people to use the platform to share content or follow other users they know, says Aaron Filner, the company's senior director.
Regarding social media site X, “I think more people these days think of it as a place to share it with friends and family, rather than as a place to see what's going on in the world,” says Keith Coleman, vice president of product.
Legal experts said it is typical to compete for a market definition.
In 1997, the FTC managed to block the merger between Staples and Office Depot, warning that it was concentrated in the office supply store market. The companies claimed they were competing with other retailers like Walmart.
The following year, the government accused Microsoft of narrowing down the competition by linking internet browsers to the popular Windows operating system. The government has convinced judges to narrowly define the market for cases as personal computers running on Intel chips except for Apple Computers and Hand-Held devices.
“Metacase's FTC takes a traditional approach to narrowly defining the market, but the challenge here is that, as it is digital, it makes sense that the market is different and competition is for the eyes and attention.”
Judge Boasberg shows little of his thoughts. Still, he notes that various social media apps appear to have many of the same features, asking if their usage is “different to degree”.
He noted that texting has replaced voice calls. Young users can even switch between platforms and technologies.
“Are these norms constantly changing?” Judge Boasberg, who does not use social media, asked expert witnesses.
