Janice R. Andrews
In an audacious step in its continuing legal battle with the Federal Trade Commission (FTC), Facebook’s parent company Meta has asked a judge to dismiss an antitrust case against the corporation before it goes to trial. The goal of this action is to undo Meta’s strategic purchases of WhatsApp and Instagram, which it completed in 2012 and 2014, respectively.
In 2020, the Federal Trade Commission (FTC) and 48 states and territories filed a lawsuit against Meta with the goal of forcing Meta to unload Instagram and WhatsApp. The claim that Meta, formerly known as Facebook, acquired these sites with the intention of stifling competition is at the heart of their argument. The Federal Trade Commission claims that Mark Zuckerberg, the CEO of Meta, saw the threat that Instagram and WhatsApp may represent and decided to buy them instead of giving in to pressure from the competition. According to the agency, Facebook’s dominance in the personal social networking sector was intended to be strengthened by these efforts.
Meta has refuted the FTC’s allegations by pointing out that the agency initially authorized both purchases and that its previous lawsuit was dropped for lack of evidence. Meta claims that the FTC has not supported its case via the discovery process, especially in proving Meta’s purported monopoly in personal social networking services and the ensuing harm to consumers and competition, even if a court has permitted an updated complaint to move forward.
The significant expenditures made in improving Instagram and WhatsApp after the acquisition are highlighted in Meta’s defense. For example, Instagram was acquired for $1 billion in 2012, when it was not yet profitable, and it provided roughly 30% of Meta’s revenue in the first half of 2022. Meta emphasizes the addition of essential services to these platforms, including as e-commerce, livestreaming, direct messaging, and Stories.
Furthermore, Meta challenges the FTC’s definition of the relevant market, claiming it is overly restrictive and leaves out well-liked activities that are essential to individualized social networking. The business notes that platforms such as YouTube and TikTok provide comparable features, so broadening the competitive landscape beyond the FTC’s list of specified entities.
Meta offers a more comprehensive criticism, pointing out flaws in the FTC’s methodology for characterizing the market and challenging the agency’s assessment of its dominance. Meta contends that assertions of dominating market share are baseless in the absence of a well defined market.
Jennifer Newstead, Chief Legal Officer of Meta, has not held back in denouncing the FTC’s activities, calling them the use of “structurally unconstitutional authority.” According to Newstead, reviewing past corporate transactions compromises the validity of regulatory procedures and can deter future investments in innovation.
This court dispute raises important concerns about the limits of antitrust enforcement and highlights the critical role that regulatory supervision plays in the IT sector. The result of this lawsuit might have a significant impact on how social media and digital innovation are shaped going forward, especially if Meta keeps pursuing legal action.
