A trial has started in a US court in Washington which could have implications for some of the world’s biggest tech giants.
At immediate stake is the future of Mark Zuckerberg’s Meta empire, owners of Facebook, Instagram and WhatsApp.
In one of the most high-profile antitrust tech cases of the century, the Federal Trade Commission (FTC) has accused Meta of maintaining a social media monopoly by acquiring rivals before they could become a real threat, rather than innovating itself.
It argues that the tech giant’s purchases of Instagram and WhatsApp in 2012 and 2014 respectively were part of a long-term strategy to neutralise competitive threats.
An FTC win could force Zuckerberg into a damaging break-up of the company.
It would also send shockwaves through fellow tech giants like Amazon and Apple, who face antitrust lawsuits.
The FTC case
The federal agency wants to force the $1.35tn Meta empire into divesting to prevent an issue like this from happening again, meaning the company would have to sell Instagram or WhatsApp (or both).
The FTC’s idea is that allowing this pattern of buying competition to continue could make it impossible for any new platform to challenge its dominance.
“They decided that competition was too hard and it would be easier to buy out their rivals than to compete with them,” said FTC lawyer Daniel Matheson in his opening statement at Monday’s trial.
In leaked emails, Zuckerberg is said have written to a colleague that Instagram ‘could be very disruptive to us’ and that ‘at a high enough price – like $500m or $1bn – they’d have to consider it (selling)’.
Another email attributed to Zuckerberg read: “One thing about startups though is you can often acquire them.”
Matheson claimed that these interactions represent ‘a smoking gun’.
Meta (which was at the time known as Facebook inc.) did in fact end up acquiring Instagram for around $1bn in 2012.
At the time many analysts questioned the high price tag for a company of Instagram’s size but it palled into insignificance when compared to the $44bn that Elon Musk paid in 2022 to acquire Twitter (now X).
In 2014 Facebook bought WhatsApp for $19bn.
Meta’s defence
On the flip side, Meta argues that it’s being unfairly targeted for building successful products and making legal acquisitions that were approved by the FTC itself when they happened.
It is also raising the point that Instagram and WhatsApp wouldn’t have grown to what they are today without the backing of Meta.
The company believes the FTC is punishing the company for executing a hugely successful business model.
Zuckerberg was the first witness in the case on Monday at a federal court in Washington DC and said he wanted to buy Instagram because of its camera technology, not because of its social network.
Meta has also argued that it does have a lot of competition, including from TikTok, Snapchat, YouTube, and X.
Meta lawyer Mark Hansen said Meta acquired Instagram and WhatsApp to improve and grow them alongside Facebook.
The potential fallout
The court case is expected to last until July, although legal appeals mean it court be years before the matter is finally resolved.
According to the Wall Street Journal, Zuckerberg has lobbied President Trump in person to have the FTC drop the case.
The FTC case against Meta was filed during Trump’s first administration but looks like becoming increasingly politicised in his second.
Earlier this month Trump granted TikTok a second 75-day extension to comply with a law that requires the video app to either sell its US operation or face a ban in the country.
It Meta lose it could make it harder for tech giants to acquire innovative startups, a move which the FTC would say encourages more innovation and competition.