FTC's Antitrust Battle Threatens to Unravel Meta’s Social Media Empire

Mark Zuckerberg’s strategic acquisitions of Instagram in 2012 and WhatsApp in 2014 paved the way for him to build a social media empire with billions of users worldwide. A decade later, the Federal Trade Commission (FTC) has launched a historic antitrust lawsuit against these acquisitions, claiming illegal monopolistic practices in the transaction, which now face the threat of enforced splits.

The FTC asserts that Meta's acquisition of Instagram and WhatsApp epitomizes ‘killer acquisitions,’ aiming to eliminate potential competition. The commission will argue that the deterioration in service quality, highlighted by increased advertising and weakened privacy protections, underscores the adverse effects of Meta's market dominance.

Presided over by Judge James Boasberg in Washington D.C., this case goes to the heart of Meta's business empire. A ruling in favor of the FTC could disrupt the vital ecosystem supporting billions of users, dismantle Meta’s cross-platform synergy built over a decade, and challenge the legitimacy of existing merger review frameworks.

Meta’s market value, approximately $1.3 trillion, largely rests on Instagram’s ad revenue. Enforced separation might trigger a precipitous drop in market capitalization, with potential losses in the hundreds of billions.

Numerous executives, including Zuckerberg and former COO Sheryl Sandberg, are scheduled to testify, making this one of the most anticipated trials in the sector.

Meta argues in its defense that the acquisitions have been beneficial for both market competition and consumer welfare, while questioning why FTC challenges the transactions so long after their conclusion.

FTC's spokesperson Joe Simonson states that under its leadership, the FTC is fully prepared for this trial, backed by a cadre of the nation’s most talented legal professionals.

As the tech industry landscape has significantly evolved since the FTC initiated the lawsuit under the Trump administration, the case serves as a critical assessment of governmental antitrust enforcement capabilities. Developments include Elon Musk's $44 billion acquisition of Twitter and the ascent of TikTok.

The outcome of the case hinges on defining social media and determining Meta’s market dominance. While the FTC insists that only a few companies like Snap Inc.’s Snapchat present real competition to Meta, Meta counters by citing numerous competitors, such as TikTok and Google's YouTube, affirming that its strategy involves replicating competitors' successful features.

This lawsuit will publicly unveil internal communications from the last 15 years, casting a spotlight on Meta’s acquisition strategy, as exemplified by Zuckerberg’s past perspective favoring acquisitions over competition.

Although the FTC argues that Instagram and TikTok do not directly compete within the social networking realm, Meta is poised to demonstrate the competitive dynamics through user behavior following temporary platform bans of TikTok.