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The acquisition of Meta on Instagram and WhatsApp helped give them “exclusive power.” The US Federal Trade Commission told the court on Monday at the start of a blockbuster trial that could force the $150 million tech giant to dissolve.
The previous Washington District Court lawsuit is expected to still provide the clearest signal about the Trump administration’s stance on antitrust policies and its desire to take on major technology.
Facebook founder Mark Zuckerberg was in court on Monday. He appeared in dark suits and tie instead of casual shirts and large gold chains he sported more frequently.
FTC lawyer Daniel Matheson claimed that Meta had hampered competition from Instagram and WhatsApp by purchasing for $1 billion and $1.9 billion in 2012 and 2014, respectively.
According to regulatory analysis, Meta had since built up a “exclusive power,” Matheson argued that 85% of the market share was spent on the app. He cited internal communications from Metabos.
“If Instagram keeps kicking ass on mobile, or if Google buys them, over the next few years, we can easily add some of our services that copy what we’re doing now,” Zuckerberg wrote in a 2011 email.
This could be “truth about almost every app”, Zuckerberg responded in court.
“Instagram could hurt us meaningfully,” he said in a 2012 email that was presented as evidence of the FTC’s intention to adopt a “easy to buy” strategy.
Facebook can be “very late” in how one of its core use cases evolves in the mobile world.
The Meta boss told the court that his company was approaching its first public offer at the time. “We were trying to become more liquid. We were thinking about whether we should use some of our capital to acquire a variety of tools.”
“We were able to not only build things up, but we were able to do more traditional build V purchase analysis,” he added.
Prior to the WhatsApp transaction, Zuckerberg in 2013 warned that messaging apps “can tip markets like the US where SMS is still a Primar (Y) platform.”
Meta knew that the deal could build a “moat” that would protect him from other challengers, Matheson said.
If convicted, Meta could be forced to unleash the WhatsApp and Instagram acquisitions in response to the remedies the FTC is seeking in the second phase of the exam.
The trial is allegedly being brought closer to the US president, Zuckerberg, who once banned Donald Trump from Facebook, to try to relax Meta’s content policy rules by regularly visiting the White House.
Earlier this month, Zuckerberg appears to have lobbyed to secure a settlement between Meta and the FTC to avoid the exam.
The trial also marks the first significant test of a massive technology enforcement under Trump’s FTC chairman Andrew Ferguson, who was in court on Monday. He unveiled his plan to crack down on the industry accused of censorship.
Sheryl Sandberg, former Chief Operating Officer of Meta, and rival leaders of Tiktok, SNAP and Google’s YouTube will also testify.
Matheson argued that Meta’s anti-competitive behavior hurts consumers, pointing to “severely increased” ads on Facebook and Instagram and Meta’s “significant privacy failure over time.”
He also accused her of trying to stifle Instagram’s rapid growth in order to avoid “network collapse” by Zuckerberg in 2018, according to a secret email written by Zuckerberg to court.
“I just keep doing that. Insurance,” Metabos said in 2012 of Instagram. Meta said he has no intention of making Instagram hungry for resources.
Meta’s lawyer Mark Hansen said the company was “no monopoly” and never “insulated” from the competition.
The “misplaced” lawsuit “bears the limits of the country’s creaking antitrust precedent,” Hansen said.
Meta also challenged the market share presented by the FTC, saying that the share of meta spent by users on the app fell below 30% when Tiktok and YouTube were considered.
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Tiktok claims it doesn’t compete with Instagram for “no pointless” and Hansen pointed out that in January it jumps to Facebook and Instagram users when Tiktok temporarily goes dark.
Meta has improved the quality of Instagram and WhatsApp, and has dramatically boosted the number of users since the acquisition, while still maintaining the service for free.
Anti-trust experts argue that the FTC is facing a difficult battle in the case, given that Judge Boasberg dismissed the initial complaint on the grounds that it was “legally inadequate” before accepting the 2022 renovated case.
Regulators first sued Meta (then Facebook) over four years ago during Trump’s first presidency.
