Meta is set to go head-to-head with the U.S. Federal Trade Commission in an antitrust trial beginning on April 14. The lawsuit revolves around claims that the technology giant undermined competition by improperly acquiring emerging companies like Instagram and WhatsApp at their initial stages.
This represents the most substantial test of Meta’s approach to managing competitors since the company was founded 21 years ago. If the Federal Trade Commission prevails in this lawsuit, Meta might have to dismantle its $1.3 trillion advertising empire, which could involve separating businesses like Instagram and WhatsApp.
Recently, Meta CEO Mark Zuckerberg has been cultivating closer ties with President Trump in what seems like an attempt to gain an advantage and possibly secure a deal that could shield his company from going to trial entirely. Last Wednesday marked another visit for the 40-year-old executive to the White House—part of just a few such meetings he’s had lately. according to a report From The Wall Street Journal. It remains to be seen whether this initiative will work out in Meta's favor.
These are the key points you should be aware of regarding Meta's landmark antitrust trial taking place this month.
The trial will serve as a verdict on previous choices.
This case adopts a backward-looking strategy to evaluate possible anti-competitive actions within the market by challenging Meta’s historical business choices. It primarily focuses on determining if the acquisitions of Instagram in 2012 and WhatsApp in 2014 were maneuvers designed to neutralize competitive pressures.
In its original lawsuit submitted in 2020, the FTC claimed: "Facebook has pursued a consistent approach—including acquiring rising competitor Instagram in 2012, purchasing the mobile messaging application WhatsApp in 2014, and imposing restrictive terms on software creators—to neutralize challenges to its dominance."
The complaint was submitted before the company's rebranding as Meta in 2021.
According to Bruce Weinberg, PhD, who leads the marketing department at the University of Massachusetts, Amherst, “The FTC’s argument with Meta revolves around choices they made previously. They’re stating: 'It’s not about whether you currently hold a monopolistic position… But due to your acquisitions of Instagram and WhatsApp at specific times, these actions have hindered opportunities for others. Therefore, potentially, you could become a monopoly sometime in the future.'"
However, this could be a precarious stance for the agency due to its emphasis on a distinct timeframe and, fundamentally, a separate market from what exists currently, according to Brian Albrecht, an antitrust specialist and the lead economist at the International Center for Law and Economics, a non-profit group focused on policy research.
Albrecht mentioned that the government might encourage us to believe—even subconsciously—that we're back in 2018 when Facebook and Instagram were dominant forces. However, he pointed out that this isn't true anymore.
Given that these deals took place quite some time ago, the Federal Trade Commission (FTC) faces a greater challenge in proving its case compared to many other antitrust disputes, according to Albrecht. He believes that the FTC will struggle to persuade a judge that reversing the acquisitions of Instagram and potentially WhatsApp would significantly affect future marketplace competition, as currently “there are more rivals and choices available now than at any point in history.”
Should the FTC win, Meta might have to separate Instagram or WhatsApp from its holdings. Milder possible consequences may include disposing of particular assets or altering how Meta handles data instead of fully breaking up the company.
Trillions of advertising dollars are up for grabs.
If the FTC manages to build a strong case against Meta, the company could face significant losses in advertising income and market position. Specifically, Instagram plays an essential role in their financial strategy—by 2025, projections indicate that Instagram will account for over half of Meta’s overall U.S. ad earnings, generating upwards of $32 billion, as per eMarketer’s latest figures.
Briefly put: Breaking up the company would devastate Meta's income streams.
"Meta relies almost entirely on income from advertisements, which means their primary worry is anything hindering them from providing advertisers a unified purchasing platform leveraging all of Meta’s gathered data insights across the internet and its widely-used services,” stated Jason Kint, CEO at Digital Content Next, an organization for digital media professionals.
For advertisers, splitting up Meta’s business could diminish the capability to utilize Meta as a single hub for purchasing ad space across many high-traffic sections of the internet. This change would compel brands to reassess their overall digital marketing budgets, according to insights shared with Massima by industry experts.
A pre-trial settlement is feasible but improbable.
It is reported that Zuckerberg has made three visits to the White House to meet with Trump since the beginning of the President's second term in January.
According to reports from The Wall Street Journal, The New York Times, and Politico, the technology executive is trying to resolve the matter before the trial was set to begin.
"Meta’s actions underscore the complex interplay between corporate might and political clout within today’s technological sphere and political climate," noted Matt Navarra, a social media consultant and industry analyst.
Even though some of technology’s leading figures—including Amazon tycoon Jeff Bezos and Google CEO Sundar Pichai—have tried to court President Donald Trump during the initial stages of his administration (let’s not forget about Trump’s advisor Elon Musk), their efforts haven’t been met with complete approval from him. The steep tariffs recently imposed by Trump are anticipated to disrupt global tech supply chains significantly and substantially raise manufacturing expenses for hardware producers as well as AI creators and companies dependent on semiconductors.
The Federal Trade Commission's antitrust lawsuit against Meta was initiated during President Trump's initial term in office.
With just under a week remaining until the scheduled start of the trial, Zuckerberg is facing a tight deadline. In the meantime, according to reports from The Wall Street Journal,White House staffers are becoming more irritated with the firm’s aggressive lobbying efforts.
According to Navarra, "Considering the present circumstances, a pre-trial agreement appears possible yet intricate, and rather improbable."
This perspective is also held by Jason Kint from Digital Content Next, who recently gave testimony in a Congressional subcommittee hearing about antitrust measures in the technology industry. According to him, the FTC’s commissioners expressed their support for enforcing antitrust regulations.
This case might establish an example for how the Federal Trade Commission operated during the Trump administration.
The upcoming trial could act as an indicator of how the Federal Trade Commission (FTC) operates under the guidance of Andrew Ferguson, who was recently appointed by President Trump. This comes after the departure of former Biden-nominated chairperson Lina Khan and the expulsion of two Democratic FTC commissioners, who have since filed lawsuits against Trump regarding their removals from office.
Although the FTC, similar to numerous governmental bodies, traditionally functions autonomously, Trump has adopted a more forceful stance on imposing his policies throughout these entities.
During the Trump era, the FTC showed some readiness to accommodate President Trump’s desires. In response to potential instructions, Ferguson indicated his openness to comply if necessary. Last Wednesday, speaking at an event in Washington, D.C., he stated that he would follow “lawful directives” from the president should they instruct him to terminate the FTC's lawsuit against Meta.
“This goes beyond just Meta,” stated Navarra. “This is about setting limits on executives’ control over such organizations. More than potentially breaking down Meta’s dominance, this case could establish how antitrust regulations will apply to major technology companies in today’s political environment....”