 "Meta chief Zuckerberg testifies in landmark antitrust trial over Instagram, WhatsApp acquisitions")
Meta CEO and co-founder Mark Zuckerberg testified Monday in a historic US antitrust trial in which his social media behemoth is accused of abusing its market dominance to purchase Instagram and WhatsApp before they could compete.
Attorneys for the Federal Trade Commission (FTC) contend that Facebook, which has since changed its name to Meta, has targeted competitors.
Zuckerberg was given an internal Facebook email from 2011 warning that Instagram was a smash on smartphones and could easily replicate what his social network offered.
Another 2012 email about acquiring Instagram proposed merely leaving the program operating without any updates while Facebook built its own products, so avoiding offending users by shutting it down.
Zuckerberg downplayed those exchanges as early talk before plans for Instagram came together.
The start of the trial in a Washington federal court dashed the hopes of Zuckerberg that the return of President Donald Trump to the White House would see the government let up on the enforcement of antitrust law against Big Tech.
The Meta case could see the owner of Facebook forced to divest Instagram and WhatsApp, which have grown into global powerhouses since their buyout.
“They decided that competition is too hard and it would be easier to buy out their rivals than to compete with them,” FTC attorney Daniel Matheson said in opening remarks at the trial.
Impact Shorts
More ShortsMeta attorney Mark Hansen countered in his first salvo that “acquisitions to improve and grow an acquired firm” are not unlawful in the United States and that is what Facebook did.
Playing to Trump
The case against Meta was originally filed in December 2020, during the first Trump administration, and all eyes were on whether he would ask the FTC to stand down.
Zuckerberg, the world’s third-richest person, has made repeated visits to the White House as he tried to persuade the US leader to choose settlement instead of fighting the trial.
As part of his lobbying efforts, Zuckerberg contributed to Trump’s inauguration fund and overhauled content moderation policies. He also purchased a $23 million mansion in Washington in what was seen as a bid to spend more time close to the center of political power.
Zuckerberg’s former lieutenant Sheryl Sandberg and a long line of executives from rival companies are scheduled to testify at a trial expected to last at least eight weeks.
Central to the case is Facebook’s 2012 billion-dollar purchase of Instagram – then a small but promising photo-sharing app that now boasts two billion active users.
An email from Zuckerberg cited by the FTC showed him depicting Instagram’s emergence as “really scary,” adding that is “why we might want to consider paying a lot of money for this.”
The FTC argues that Meta’s $19 billion WhatsApp acquisition in 2014 followed the same pattern, with Zuckerberg fearing the messaging app could either transform into a social network or be purchased by a competitor.
Meta’s defense attorneys counter that substantial investments transformed these acquisitions into the blockbusters they are today.
They also highlight that Meta’s apps are free for users and face fierce competition.
The FTC argues that Meta’s monopoly power is demonstrated by a severely downgraded user experience – with too many ads and product changes.
A key courtroom battleground will be how the FTC defines Meta’s market.
The US government argues that Facebook and Instagram are dominant players in apps that provide a way to connect with family and friends, a category that does not include TikTok and YouTube.
But Meta disagrees.
“The evidence at trial will show what every 17-year-old in the world knows: Instagram, Facebook and WhatsApp compete with Chinese-owned TikTok, YouTube, X, iMessage and many others,” a spokesperson said.
“The bigger that Meta can make the relevant market… the more likely it is to defeat the FTC’s case,” said lawyer Brendan Benedict on Substack.
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