Meta illegal monopoly trial: What’s at stake? Could (and should) Meta be broken up?

What is the Meta antitrust trial about?

The case was prepared by the Federal Trade Commission (FTC) and if the regulator manages to convince a Washington court to rule in its favour, it could lead to a split up of the $1.4 trillion company — the biggest splintering of a company in over four decades, when telecom giant AT&T was unwound. But more broadly, it could set a new precedence for how Big Tech companies operate.

It would also show the appetite the new US administration has to take on the Big Tech, especially as many of them have made a beeline to placate Trump, by adopting measures such as pausing diversity hires, stopping fact checks, and establishing a clearer communication line with the White House, among other things.

Meta defends in round one

During the testimony in the case, the FTC pointed to a 2011 email Zuckerberg sent saying: “Instagram seems like it’s growing quickly.” The following year, he sent another email saying the company was “so far behind that we don’t even understand how far behind we are… I worry that it will take us too long to catch up”.

Zuckerberg, Witness number one in the case, said the emails were “relatively early” conversations about buying the app and that since its acquisition, Meta has made several improvements to the platform.

FTC’s lead lawyer, Daniel Matheson, questioned Zuckerberg about the “core value proposition” of Meta, a question which could turn out core to the regulator’s strategy of showing that the social media giant engaged in monopolistic behaviour in the “personal social networking” market, which the FTC contends consists of just four platforms — Instagram and WhatsApp, Snapchat and a much smaller app called MeWe. By including the two Meta-owned services, the FTC claims that the company owns nearly 80 per cent of active users in the market. However, Zuckerberg contended that his platforms have evolved from friends and family, and toward “more of a broad discovery-entertainment space”.

The company has also argued that the definition and examples chosen by the FTC to set the market and further prove abuse of dominance are narrow, since they exclude Chinese tech giant ByteDance-owned TikTok, iPhonemaker Apple-owned iMessage, and other services.

What is FTC’s case against Meta

The regulator had alleged that Meta had illegally maintained its personal social networking monopoly through a years-long course of anticompetitive conduct.

According to the FTC’s complaint, Facebook targeted potential competitive threats to its dominance. Instagram, a rapidly growing startup, emerged at a critical time in personal social networking competition, when users of personal social networking services were migrating from desktop computers to smartphones, and when consumers were increasingly embracing photo-sharing. The complaint alleged that “Facebook executives, including CEO Mark Zuckerberg, quickly recognised that Instagram was a vibrant and innovative personal social network and an existential threat to Facebook’s monopoly power”.

According to the FTC, Facebook (since rebranded to Meta) initially tried to compete with Instagram on the merits by improving its own offerings, but ultimately chose to buy Instagram rather than compete with it. “Facebook’s acquisition of Instagram for $1 billion in April 2012 allegedly both neutralises the direct threat posed by Instagram and makes it more difficult for another personal social networking competitor to gain scale,” the complaint said.

Around the same time, according to the complaint, Facebook perceived that “over-the-top” mobile messaging apps also presented a serious threat to the company’s monopoly power. In particular, the complaint alleged that Facebook’s leadership understood, “and feared”, that a successful mobile messaging app could enter the personal social networking market, either by adding new features or by spinning off a standalone personal social networking app.