The Federal Trade Commission on Monday accused Meta of creating a monopoly that squelched competition by buying start-ups that stood in its way, kicking off a landmark antitrust trial that could dismantle a social media empire that has transformed how the world connects online.
In a packed courtroom in the U.S. District Court of the District of Columbia, the F.T.C. opened its first antitrust trial under the Trump administration by arguing that Meta illegally cemented a monopoly in social networking by acquiring Instagram and WhatsApp when they were tiny start-ups. Those actions were part of a “buy-or-bury strategy,” the F.T.C. said.
Ultimately, the purchases coalesced Meta’s power, depriving consumers of other social networking options and edging out competition, the government said.
“For more than 100 years, American public policy has insisted firms must compete if they want to succeed,” said Daniel Matheson, the F.T.C.’s lead litigator in the case, in his opening remarks. “The reason we are here is that Meta broke the deal.”
“They decided that competition was too hard and it would be easier to buy out their rivals than to compete with them,” he added.
The trial — Federal Trade Commission v. Meta Platforms — poses the most consequential threat to the business empire of Mark Zuckerberg, the company’s co-founder. If the government succeeds, the F.T.C. would most likely ask Meta to divest Instagram and WhatsApp, potentially shifting the way that Silicon Valley does business and altering a long pattern of big tech companies snapping up younger rivals.
Still, legal experts cautioned that it might be challenging for the F.T.C. to win. That’s because the government must prove something unknowable: that Meta, formerly known as Facebook, wouldn’t have achieved the same success without the acquisitions. It is also extremely rare to try to unwind mergers approved years ago, legal experts said.
“One of the most difficult things for antitrust laws to deal with is when industry leaders purchase small potential competitors,” said Gene Kimmelman, a former senior official in the Obama administration’s Department of Justice. Meta, he added, “bought many things that either didn’t pan out or were integrated. How are Instagram and WhatsApp different?”
The efforts continue a yearslong bipartisan pursuit to curtail the vast power that a handful of tech companies have over commerce, the exchange of ideas, entertainment and political discourse. Despite attempts by tech executives to court President Trump, his antitrust appointees have signaled that they will continue the course.
The F.T.C.’s case against Meta is the third major tech antitrust lawsuit to go to trial in the past two years. Last year, the D.O.J. won its antitrust case against Google for monopolizing internet search. A federal judge is set to hear arguments over remedies, including a potential breakup, next week. The D.O.J. also completed a separate trial against Google for monopolizing ad technology, which is still being decided by a federal judge.
The Justice Department has also sued Apple, and the F.T.C. has sued Amazon, accusing the companies of antitrust violations. Those trials are expected to begin next year.
The case against Meta could affect its 3.5 billion users, who on average log onto Facebook, Instagram or WhatsApp multiple times a day for news, shopping and texting. Instagram and WhatsApp have attracted more users in recent years as Facebook, Meta’s flagship app, has stopped growing.
F.T.C. Chairman Andrew Ferguson was in the courtroom to listen to the government’s opening statement. Meta’s chief legal officer, Jennifer Newstead, and Joel Kaplan, its chief global affairs officer, also attended.
Presiding over the case is Judge James Boasberg, 62, the senior judge in the federal court. He is already in the national spotlight for rejecting the Trump administration’s effort to use a powerful wartime statute to summarily deport Venezuelan migrants it deemed to be members of a violent street gang.
Judge Boasberg said he had never been a user of Meta’s apps, but was familiar with Facebook Live, which has been featured in criminal trials.
During what is projected to be an eight-week trial, the government and Meta are expected to tell competing versions of the company’s 20-year growth story.
The F.T.C.’s argument hinges on Section 2 of the Sherman Antitrust Act of 1890, which forbids a company from maintaining a monopoly through anticompetitive practices.
The F.T.C. accused Facebook, as the company was previously known, of struggling to build a mobile app and fearing that Instagram would rapidly outpace it in popularity. The company overpaid when it purchased Instagram in 2012 for $1 billion, the F.T.C. argued.
In 2014, as WhatsApp grew, Meta offered to buy the company for $19 billion — also far above its market value, the government said.
The F.T.C. plans to highlight a paper trial of emails between Meta executives, alongside other evidence, to argue that the company bought the start-ups because they were threats.
The government is set to call witnesses from Meta, as well as competitors, venture capitalists, economists and media industry executives. Mr. Zuckerberg was expected to be called as the first witness as soon as Monday. The F.T.C. said former chief operating officer, Sheryl Sandberg, and Kevin Systrom, co-founder of Instagram, will testify this week.
Source: nytimes.com
