(Bloomberg) – The Federal Trade Commission finally confronts Meta Platforms Inc. in court and believes that the company had to illegally monopolize the social media market more than a decade ago when it bought Instagram and WhatsApp.
The opening ceremony of the FTC Salvo began in Washington on Monday, with Chief Justice James Boasberg in this case for many years. Institutional lawyers initiated their argument by citing the long-standing U.S. tradition of seeking to secure a competitive market, and the FTC’s lead trial attorney Daniel Matheson has been accused of Meta of violating competition.
“For more than 100 years, U.S. public policy insists that if companies want to succeed, they must compete,” Matheson said in his opening speech. “The reason we are here is that Meta broke the deal.”
If FTC prevails, derivatives from Instagram and WhatsApp will undo the integration between the apps, undermine the world’s two most popular digital consumer products and potentially remove hundreds of billions of dollars in Meta market value. This will also raise serious questions about how the government evaluates and approves the transaction.
The company is expected to strike back at its defense later on Monday. The trial is expected to last about two months and has given testimony this week, CEO Mark Zuckerberg and former executive Sheryl Sandberg.
FTC Chairman Andrew Ferguson attended the opening ceremony of the trial in court. Earlier Monday, warning of over-regulation, he told Fox Business: “Anti-trust law can help ensure that no private sector companies are so powerful that it affects our lives in a truly unfavorable way for all Americans.”
The final decision will depend on how social media is defined and whether Meta dominates the market. The FTC will focus on how people communicate with their friends and family – the so-called “personal social networking services” market, which claims this is mainly composed of messages and media shared between close contacts.
The FTC believes Meta-buying Instagram and WhatsApp are “killer acquisitions” that prevent these companies from competing. To support the case where its components are monopoly, the FTC will argue that the quality of its applications has declined, most notably advertising has increased and weakened privacy protections.
Matheson in 2010 “Meta faces ocean changes in competitive conditions” referring to the growing mobile market. “They think competition is too difficult and buying out competitors is much easier than competing with them.”
According to Matheson, Meta bought WhatsApp in part to defend against a quote from Alphabet Inc.’s Google, which is also considering buying the company. Meta also considered buying Snap Inc. for $6 billion in 2013, although Snapchat owners rejected the offer. This number was not clear before, as the report at the time fixed the discussion to half.
SNAP representatives did not immediately respond to requests for comment on Monday.
Matheson said in his opening argument that the FTC will focus on “smoking gun” emails from Meta executives, including Zuckerberg, especially a 2012 letter that he described the Instagram protocol as a way to “neutralize competitors.”
Matheson said after Meta bought Instagram, it “fundamentally manipulated the experience”, allowing it to avoid swallowing its own more profitable Facebook product. While this is a “rational business decision”, Matheson said it “offensives the policy of antitrust law.”
Meta is actively opposing the FTC’s claims, believing it is competing with various platforms, including Bytedance Ltd.’s Tiktok, Snap’s Snapchat, Google’s YouTube, Apple Inc.’s Imessage and Elon Musk’s X.
Only Snapchat competes with Meta, and many other competitors, including MySpace, have now gone bankrupt, the agency said.
The FTC may be tough in court. Although Boasberg denied Meta’s motion to file a case in November, he said: “However, it’s widespread here and does not conceal the difficult question of whether the committee can stick to its claims in the trial crucible.”
Meta also believes that the FTC has the opportunity to challenge the deals – Instagram in 2012 and WhatsApp in 2014 – to allow them to continue.
The FTC investigated META in the first Trump administration in 2019 and sued the company in December 2020. The Biden administration, led by former FTC Chairman Lina Khan, filed a lawsuit, which is now in the hands of Ferguson, who is in charge of Ferguson, named January by President Donald Trump.
The case will test the government’s ability to compete in police in a rapidly growing field of technology, which is growing rapidly. Since 2019, Musk has purchased Twitter Inc., Tiktok has become one of the world’s most important social media apps, and Meta has launched rival products to compete with both of them.
(Update with FTC lawyers from the second paragraph.)
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