The Meta v. FTC antitrust trial, in which the Federal Trade Commission is attempting to force Meta to divest Instagram and WhatsApp, recently concluded after six weeks. Judge James Boasberg will offer his opinion once all follow-up submissions are submitted over the summer. Industry experts seem convinced that the trial will go Meta’s way, leaving many wondering what the point was.
Unfortunately for all involved, especially perhaps the FTC, the whole venture has proven a colossal waste of time. Many industry commentators thought the FTC’s case was unfounded from the beginning, and the trial has done nothing to assuage their concerns. As expected, the FTC has relied on a fatally flawed market definition and hindsight testimony to prosecute its case.. The FTC’s probable failure is further evidence that government regulators should refrain from intervening in markets they do not fully understand.
Perhaps the most bizarre part of the trial is the market definition that the FTC chose in its attempt to prove Meta’s monopoly status. The FTC said that the major players in the “personal social networking services” market consisted of Meta, Instagram, Snapchat and MeWe. One could be excused for wondering why Meta’s actual competitors — such as TikTok, YouTube and X — have been conveniently left out of the market definition. Of course, Meta is a big scary monopoly if you include MeWe and its 20 million users worldwide while excluding TikTok and its 135 million users in the United States. It is hoped we can all agree that good regulation should start from a basis even close to resembling the market reality, not from contrived definitions designed to punish one company.
If the clumsily manufactured market definition was not enough to ensure the case was terminal, the FTC’s testimony surely is. Throughout the trial, it became clear that the picture the FTC was attempting to paint of Meta and Mark Zuckerberg could only be done with extreme hindsight. The FTC made the point that Meta’s acquisition of WhatsApp for $19 billion was an example of Meta paying a premium to squash a potential competitor. Without getting into the debate about whether Facebook and WhatsApp are direct competitors (which is almost certainly not the case), this is the least charitable explanation for the merger possible.
Judge Boasberg pointed to the counterexample of Instagram, acquired for “only” $1 billion in 2012. Instagram’s value has skyrocketed since the Meta acquisition, as it has acquired users and features. As Boasberg succinctly put it to the FTC’s expert witness, Scot Hemphill, “why can’t you think about it that Mark Zuckerberg is really smart” and that he saw the value where others didn’t?
The FTC’s case is one of extreme cynicism. It was never a given that WhatsApp or Instagram would flourish under Meta’s stewardship, and many witnesses testified as much. WhatsApp co-founder Brian Acton confirmed that the original vision of WhatsApp development was nothing like the social media features of Facebook, and that Meta’s acquisition allowed WhatsApp to grow into a popular service much more quickly.
In the end, Zuckerberg needed no help from the White House, despite his best efforts; the FTC decidedly failed to prove its case. A flawed market definition and lackluster evidence at trial probably won the day for Meta. This should be a cause for celebration for those who care about consumer rights and keeping the government’s regulating zeal in check.
The breakup of Meta could have negative implications for all users of Instagram and WhatsApp, either through changes to services or less future investment. The success of the FTC would also set a dangerous precedent of the government relitigating business decisions from a decade ago simply because of their success.
Boasberg will lilkely side with Meta, as he should. This Frankenstein’s monster of an antitrust trial has been a politically motivated boondoggle. If politicians decide that big tech needs to be reigned in, perhaps they should start with the litany of free speech and national security issues rather than attempting to punish Meta for its successful platforms. The FTC should choose its next target wisely.
