Mark Zuckerberg, chief executive of Meta Platforms Inc., in Washington, D.C., 2024. (Credit: ANDREW CABALLERO-REYNOLDS/AFP via Getty Images files)
A landmark antitrust trial that could reshape how America’s Big Tech firms operate got underway Monday, with Mark Zuckerberg‘s Meta Platform Inc. facing accusations that it adopted a “buy or bury” strategy to squash potential rivals. The case, which could result in the Facebook owner having to divest its Instagram and WhatsApp platforms, will unfold in a Washington, D.C., courtroom over the coming weeks. Here’s what’s at stake for the tech giant, and what it could mean for its business and operations in the U.S. and around the world.
Why is Meta on trial?
In December 2020, the Federal Trade Commission and 48 state attorneys general, launched an antitrust lawsuit against Facebook — as the company was then known — accusing the company of illegal, anti-competitive behaviour.
“For nearly a decade, Facebook has used its dominance and monopoly power to crush smaller rivals and snuff out competition, all at the expense of everyday users. We are taking action to stand up for the millions of consumers and many small businesses that have been harmed by Facebook’s illegal behaviour,” said Letitia James, New York attorney general who led the U.S. states’ investigation.
The lawsuits zeroed in on Facebook’s US$1 billion acquisition of Instagram in 2012 and US$19 billion purchase of WhatsApp two years later. The FTC accused Facebook of failing to compete with new innovators in the mobile app marketplace, alleging that instead it “illegally bought or buried them when their popularity became an existential threat.”
During the trial, the FTC will try to prove that Facebook has maintained a monopoly in the social networking space — one that has evolved with the rise of new entrants such as short video app TikTok. It will attempt to show that Facebook’s Instagram and WhatsApp purchases quashed competition and that the company subsequently leveraged its market dominance to unfairly inflate ad prices and worsen data privacy rights for users.
What does Meta say?
The FTC’s lawsuit against Meta is “misguided,” according to Meta attorney Mark Hansen. Meta’s main defence rests on trying to establish that the FTC’s definition of the social media app marketplace is too restrictive and fails to include key competitors such as Alphabet Inc.’s YouTube and ByteDance Ltd.’s TikTok. Meta also contends that the commission cannot prove that American consumers and advertisers are worse off because of its acquisitions, and argues that it has improved the startups it purchased. “Any way you look at it, consumers have been the big winners,” Hansen said.
What’s at stake for the company?
At stake for the company is its control over photo-sharing app Instagram and messaging platform WhatsApp, which each have more than 2 billion active users. Facebook must divest both businesses in order to restore marketplace competition, according to the FTC.
Meta is not only a social media company. It has invested at least over US$165 billion into artificial intelligence (AI) and immersive reality initiatives to cement its position as a serious deep-tech player.
But its lucrative ad business, of which Instagram is a key contributor, remains a major moneymaker. This year, Instagram is expected to earn US$32 billion in U.S. ad revenue for Meta — or half of the company’s ad revenue, according to numbers from market intelligence firm eMarketer. Instagram’s U.S. user base has surged 142 per cent to 148 million users in the last decade, eMarketer says.
Will other countries follow suit?
Meta in recent years has found itself in the crosshairs of U.S. and global regulators.
The EU in particular, has carved out a tough stance toward Big Tech in a bid to limit the market power and influence of U.S. tech companies. The European Commission began investigating last year whether Meta and Apple Inc. breached the EU’s digital competition rules. The EU’s Digital Markets Act (DMA) came into force in May 2023 and established guidelines for Big Tech firms in a bid to create a fairer marketplace and provide European consumers with more choice.
The EU is set to announce its verdict in coming weeks, with antitrust watchers expecting Brussels to dole out modest fines for the two companies for regulatory infractions, according to Reuters. Trump’s trade war has pushed the EU even further, with EU president Ursula von der Leyen noting that the bloc could impose fines on U.S. tech firms if trade talks break down.
Has Meta won over Trump?
Meta’s antitrust trial will be its first major test under the second Trump administration. The FTC’s case against Meta began in 2020 during U.S. President Donald Trump’s first term.
The U.S. president previously threatened to sentence Zuckerberg to “life in prison,” alleging that the tech CEO weaponized Facebook against him during the 2016 U.S. presidential election.
Citing the changing legal and policy landscape, Meta in recent months has made a series of sweeping changes seemingly meant to assuage Trump’s criticisms of Zuckerberg and Facebook, including axing fact-checking partnerships and diversity initiatives. Last December, Meta donated US$1 million to Trump’s inauguration fund. Meta also lobbied the Trump administration in recent weeks in an effort to bring the antitrust trial to a halt and see the government and the company strike a settlement, according to a Wall Street Journal report.
“Regulators should be supporting American innovation, rather than seeking to break up a great American company and further advantaging China on critical issues like AI,” Meta said in a statement.
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