Meta in the Hot Seat: Trial Looms Over Instagram, WhatsApp Buys

Meta CEO Mark Zuckerberg testifies before the Senate Judiciary Committee's hearing on online child safety on Capitol Hill, Wednesday, Jan. 31, 2024 in Washington.(AP Photo/Jose Luis Magana)

WASHINGTON (TNND) — Meta will be going to trial to defend itself in a years-long antitrust case being levied by the Federal Trade Commission over its acquisitions of Instagram and WhatsApp in the latest example of its aggressive approach toward major U.S. technology companies.

Meta sought to avoid a full trial earlier this year, asking a judge to issue a summary judgement on the case, which led to Wednesday’s ruling. In a 92-page opinion, U.S. District Judge James Boasberg said the FTC had presented enough evidence to warrant a full trial.

“While the parties’ legal jousting is both impressive and comprehensive, it leaves no clear victor,” Boasberg wrote. “This case must go to trial.”

The FTC argues that Meta’s acquisitions of photo-sharing app Instagram and messaging platform WhatsApp helped it remove potentially dangerous rivals from the marketplace and boosted profits by taking in more advertising dollars while denying users more social networking options. Regulators are seeking a break-up of the company that would force Meta to sell off Instagram and WhatsApp, two of the most popular platforms with billions of users around the world.

The FTC has taken a much more aggressive approach toward antitrust under President Joe Biden and chair Lina Khan. The Biden administration is also pursuing cases against Amazon, Google and Apple, charging that each of the companies are wielding monopoly power to stomp out competition and raising prices for consumers in the process.

Google is facing two separate antitrust cases, one accusing it of maintaining an illegal monopoly for its synonymous online search and another over its advertising technology. Amazon has been accused of anticompetitive practices with its massive market share in online retail and Apple is defending itself from allegations that the iPhone manufacturer has monopolized the smartphone market.

FILE – A person stands in front of a Meta sign outside of the company’s headquarters in Menlo Park, Calif., March 7, 2023. (AP Photo/Jeff Chiu, File)

Meta has denied the allegations and said its purchases of Instagram and WhatsApp have been good for consumers.

“We are confident that the evidence at trial will show that the acquisitions of Instagram and WhatsApp have been good for competition and consumers. More than 10 years after the FTC reviewed and cleared these deals, and despite the overwhelming evidence that our services compete with YouTube, TikTok, X, Apple’s iMessage, and many others, the Commission is wrongly continuing to assert that no deal is ever truly final, and businesses can be punished for innovating,” a Meta spokesperson said in a statement.

Boasberg highlighted some of the challenges facing the FTC’s pursuit of a break-up of the company. Proving consumers were harmed by the purchases of Instagram and WhatsApp may be difficult because assertions that competition in social media would be better are hypotheticals at this point and the platforms do not charge users for access, meaning costs were not inflated due to the purchases.

“Recall that Meta and many of its competitors do not charge for use, preferring instead to capture advertising revenues. That makes this case an awkward fit with many of this nation’s antitrust precedents, which have confronted anticompetitive practices mostly in markets subject to more traditional price and output effects,” he wrote.

While the FTC has projected confidence over its case that Meta is harming consumers by allegedly operating an illegal monopoly, proving that may be tricky for its legal team. The consequences of undoing the merger are also complicated as Meta has owned and integrated WhatsApp and Instagram into Facebook and related products for years.

“It’s tricky because it’s very uncertain. Is there any real evidence that they would have become a major social networking platform?” said Alden Abbott, former general counsel for the Federal Trade Commission and a senior research fellow with the Mercatus Center. “Then there’s a problem of divesting these integrated assets, unscrambling the eggs, and that’s going to certainly harm the quality of Facebook’s platform. It is unclear, would they be standalone, some other major platform acquire them? Wouldn’t that have a different sort of risks?”

A hearing in Meta’s is scheduled for Nov. 25 to set a trial date in the case, which is expected to stretch into the upcoming second Trump term. It’s unclear so far whether a second administration will be supportive of the case against Meta. Khan’s aggressive approach to antitrust has mostly been opposed by Republican lawmakers but does have some conservative support, including Vice President-elect JD Vance.

“I guess I look at Lina Khan as one of the few people in the Biden administration that I think is doing a pretty good job,” Vance said at Bloomberg’s “RemedyFest” technology forum in February.

Trump has suggested he would take a lighter tone with antitrust in his second administration but there is no certainty for Meta that the incoming administration would be willing to drop the case or the bid to break up the company.

“I don’t think Facebook is counting on that. It could be months before a new chairman is confirmed, unless there’s a recess appointment, which is sort of weird and unusual,” Abbott said. “I don’t think it’s likely that the FTC is going to drop this and I don’t think the election affects the way the judge is going to look at it any way.”