By Jody Godoy
WASHINGTON (Reuters) -Facebook parent Meta Platforms faces a high-stakes trial in Washington starting on Monday on claims it built an illegal social media monopoly by spending billions of dollars to acquire Instagram and WhatsApp, in a case where U.S. antitrust enforcers seek to unwind the deals.
The acquisitions more than a decade ago aimed to eliminate nascent competitors who could threaten Facebook’s status as the go-to social media platform for users to connect with friends and family, the U.S. Federal Trade Commission claims. It filed the case in 2020 during President Donald Trump’s first term.
The FTC seeks to force Meta to restructure or sell parts of its business including Instagram and WhatsApp.
Meta Chief Legal Officer Jennifer Newstead called the case weak and a deterrent to tech investment in a blog post on Sunday.
“It’s absurd that the FTC is trying to break up a great American company at the same time the Administration is trying to save Chinese-owned TikTok,” she wrote.
The case poses an existential threat to Meta, which by some estimates earns about half of its U.S. advertising revenue from Instagram, while also giving the public its first real measure of how strongly the new Trump administration will follow up on its promises to take on Big Tech.
Meta has been making regular overtures to Trump since his election, nixing content moderation policies Republicans said amounted to censorship and donating $1 million to Trump’s inauguration. Meta CEO Mark Zuckerberg has also visited the White House multiple times in recent weeks.
“The Trump-Vance FTC could not be more ready for this trial,” said FTC spokesperson Joe Simonson, adding, “We are blessed with some of the most hardworking and intelligent lawyers in the country who are working around the clock.”
ZUCKERBERG EXPECTED TO TESTIFY
Zuckerberg is expected to testify at the trial, where he will face questioning about emails in which he proposed acquiring photo-sharing app Instagram as a way to neutralize a potential Facebook competitor and expressed worry that encrypted messaging service WhatsApp could grow into a social network.
Meta has argued in court papers that its purchases of Instagram in 2012 and WhatsApp in 2014 have benefited users, and that Zuckerberg’s past statements are no longer relevant amid fierce competition from ByteDance’s TikTok, Google’s YouTube and Apple’s messaging app.
How users spend time on social media, and whether they consider the services interchangeable, will be core to the case. Meta will point to an increase in traffic to Instagram and Facebook during TikTok’s brief shutdown in the United States in January as evidence of competition, according to court records.
The FTC claims Meta holds a monopoly on platforms used to share with friends and family, where its main competitors in the United States are Snap’s Snapchat and MeWe, a tiny privacy-focused social media app launched in 2016. Platforms where users broadcast content to strangers based on shared interests, such as X, TikTok, YouTube and Reddit, are not interchangeable, the FTC has argued.
U.S. District Judge James Boasberg said in a ruling in November that while the FTC has enough evidence to move forward, the agency “faces hard questions about whether its claims can hold up in the crucible of trial.”
The trial is scheduled to stretch into July. If the FTC wins, it would have to prove at a second trial that measures such as forcing Meta to sell Instagram or WhatsApp would restore competition.
Losing Instagram in particular could prove catastrophic to Meta’s bottom line.
While Meta does not release app-specific revenue figures, advertising research firm Emarketer forecast in December that Instagram would generate $37.13 billion this year, a little over half of Meta’s U.S. ad revenue.
Instagram also generates more revenue per user than any other social platform, including Facebook, according to Emarketer.
WhatsApp to date has contributed only a sliver to Meta’s total revenue, but it is the company’s biggest app in terms of daily users and ramping up efforts to earn money off tools like chatbots. Zuckerberg has said such “business messaging” services are likely to drive the company’s next wave of growth.
The case is one of five where the FTC and U.S. Department of Justice accuse Big Tech companies of maintaining illegal monopolies.
Amazon and Apple are both being sued, and Alphabet’s Google is facing two lawsuits, including one where a trial is set to begin next week on the government’s bid to force Google to sell its Chrome browser.
(Reporting by Jody Godoy in Washington and Katie Paul in New York; Editing by Mark Porter)
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