(Bloomberg) — Tech executives from major social media networks like TikTok, X, Reddit, Pinterest and Discord have appeared in federal court over the past week as part of the US Federal Trade Commission’s antitrust trial against Meta Platforms Inc.
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Meta believes they are competitors. The FTC disagrees.
The fight to legally define the social networking market has taken center stage at the trial, which is in its third week in Washington. The initial excitement of the trial’s first few days, which saw high-profile witnesses such as Chief Executive Officer Mark Zuckerberg and Instagram co-founder Kevin Systrom, has given way to a slower but arguably more important phase of litigation: Defining Meta’s competitive market.
The FTC’s case – which aims to break Meta up and force it to spin off Instagram and WhatsApp – hinges on proving that Meta has obtained and held a monopoly in a narrowly defined market referred to in court as “personal social networking services.” That market consists primarily of products focused on sharing things online with friends and family.
Meta’s future, meanwhile, may depend on convincing US District Judge James Boasberg that its list of competitors is long, and that its products have evolved since their creation to compete in other areas like video, entertainment, shopping and private messaging.
Lawyers for the FTC have made great efforts to call out the distinct product differences between Facebook and its potential competitors. X and Reddit Inc., for example, allow users to sign up anonymously and use pseudonyms, which is against Facebook’s user rules. TikTok Inc., meanwhile, relies almost entirely on a user’s interests to show people videos it thinks they may like, which is different from Facebook and Instagram’s historical approach of showing people posts based on their web of friends and family connections.
Meta has argued that its products have evolved. During early testimony, Zuckerberg claimed that the percentage of posts that users see on Facebook and Instagram related to their friends and family has been declining for the past several years. On Tuesday, Javier Olivan, the company’s chief operating officer, echoed those comments and said he was seeing people who don’t have friends on the platform use it for other reasons such as shopping, dating and video-sharing.
“Things have changed quite dramatically in the last few years,” he said.
A Meta spokesperson declined to comment.
TikTok and X
The FTC has pulled up old interviews and marketing materials from potential rivals that are intended to distance themselves from Meta. During a video deposition with Blake Chandlee, a now-former TikTok executive, the FTC called out an interview he gave in 2022 in which he focused on the key differences between the two companies.
“We are an entertainment platform,” Chandlee said at the time. “The difference is significant. It’s a massive difference.”
X’s Keith Coleman, a product executive who has been at the company since 2016, well before Elon Musk’s takeover, testified Monday that X is primarily for people following posts about their interests. “Most people are following accounts of people they don’t know,” he said during questioning from the FTC’s lawyers.
See More: Meta Saw TikTok as ‘Highly Urgent’ Threat, Zuckerberg Says at Antitrust Trial
In an old email surfaced during discovery, former CEO Jack Dorsey was asked whether he believed X, then called Twitter, should focus on personal social networking in addition to public conversations. Dorsey was open to the idea, but noted that it shouldn’t be the core focus.
“There’s already a service out there that does personal network well,” he wrote, “so let’s focus on our strategy of interest network.”
Friend-Focused
While the FTC has latched on to each network’s desire to differentiate from Meta — an important strategy to attract users and advertisers looking for alternatives — Meta has instead homed in on its rivals’ public messaging. Discord Inc., for example, shows some new users a screen that says “find your friends” when they sign up for the app, and allows people to sync their phone contacts to connect with people they know. TikTok, too, has a “find friends” feature and lets users sync their contacts.
X also had friend-focused messaging on its site. The company’s help page included a line that read, “X is a service for friends, families and coworkers to stay connected through exchange of quick, frequent messages.”
When asked about the messaging, Coleman was dismissive. “I don’t know who wrote that,” he replied. “I can’t believe that’s on the website.”
In other cases, Meta has tried to steer the focus toward actual product features instead of product framing. Meta’s WhatsApp and Messenger services offer private messaging in much the same way Apple Inc.’s iMessage does, the company has argued. It also offers a rival short-form video product, called Reels, which is akin to TikTok, and has started to move away from friends and family sharing to recommend more posts based on a user’s interests.
But where Meta’s argument may be strongest is when it comes to business: Almost all the companies that have appeared in court compete for the same pot of advertising dollars that Facebook and Instagram do. Reddit listed both Facebook and Instagram as competitors in its public S-1 document before its IPO, Meta pointed out. So did Snap Inc., Pinterest Inc. and X, then called Twitter.
Chandlee, who ran advertising for TikTok before stepping down earlier this year, acknowledged that TikTok competes with a “very broad” set of competitors, including Facebook and Instagram.
Boasberg will be challenged to unravel the hours of testimony and ultimately decide how to weigh the various arguments. Should a company’s effort to distinguish itself outweigh shared features and an industrywide battle over the same advertising dollars? At times, Boasberg has asked questions of his own, and during an exchange with one FTC expert last week seemed to suggest that “norms” of behavior change over time — perhaps a sign that some of Meta’s arguments have landed.
The trial is set to last at least until June, and several other social media executives are expected to testify, including those from YouTube and Snap.
(Update with testimony from Meta’s chief operating officer.)
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