In an FTC antitrust win, Meta could face divestitures
The FTC argues that Meta acquired Instagram and WhatsApp to eliminate competition in social media networks. If the FTC wins its case, Meta could be forced to sell those products.
As the Federal Trade Commission and social media giant Meta await a decision in an antitrust case regarding the company's acquisitions of two social networking apps, it remains unclear whether the case judge will find that Meta illegally monopolized the social media market.
That's according to experts speaking during a panel discussion hosted by the Information Technology and Innovation Foundation on Thursday. The FTC alleges in the antitrust case that Facebook acquired Instagram and WhatsApp to eliminate competition in the social media market and maintain an illegal monopoly.
Meta isn't the only U.S. tech giant facing antitrust scrutiny. Others, including Google, Amazon and Apple, are navigating their own antitrust lawsuits and questions about market dominance. Google recently lost two antitrust cases and was deemed an illegal monopolist over online search and digital advertising technology.
In the Meta case, the FTC narrowly defined the social media market to include competitors Facebook, Instagram, Snapchat and MeWe. However, during the trial Meta argued that other social media networks such as YouTube and TikTok demonstrate a competitive market. Brendan Benedict, principal at Benedict Law Group, said that's an argument Meta needs to win.
The fight really comes down to [whether] TikTok and YouTube are part of the market and how does that affect market shares.
Brendan BenedictPrincipal, Benedict Law Group PLLC
"The fight really comes down to [whether] TikTok and YouTube are part of the market and how does that affect market shares," Benedict said during the ITIF panel discussion. "Meta has to win that both are in the market to get to a place where market shares are low enough not to make it plausible that there's monopoly power."
The FTC first filed the antitrust case against Facebook, now Meta, during President Donald Trump's first administration. After the initial case was dismissed, the FTC refiled its case during President Joe Biden's administration. The antitrust case went to trial earlier this year during Trump's second administration and concluded in May. The trial took place before U.S. District Court Judge James Boasberg, who will decide whether Meta acted anticompetitively.
Potential for divestiture
Should Boasberg rule that Meta acted as an illegal monopolist over social media networks, the company could be forced to sell Instagram, which it acquired in 2012. It could also be ordered to divest WhatsApp, which Meta acquired in 2014.
Instagram serves as the FTC's strongest argument for Meta seeking to maintain an illegal monopoly due to "compelling emails" sent by Meta founder Mark Zuckerberg that were cited as evidence during the trial, Benedict said.
"The big one is where Mark Zuckerberg seems to agree that the purpose of the Instagram acquisition is to 'neutralize a potential competitor,'" he said. "All the FTC has to do at step one is to show, 'Was Instagram a nascent competitor?' I think it did that."
Divestiture to boost market competition would function as a natural remedy in a case like this, Benedict said. While a digital markets antitrust case like Meta's isn't as clear-cut as traditional industry cases, the FTC has a "fighting chance" at winning its case, Benedict added.
One of the biggest detriments to the FTC's case is proving consumer harm, said Jessica Melugin, director of the Center for Technology & Innovation at think tank Competitive Enterprise Institute, who spoke during the ITIF panel discussion. After acquiring WhatsApp, for example, Melugin said Meta offered the app for free to consumers.
"To me, that's some pretty solid economic proof that there is not consumer harm happening," she said.
Panelist Dan Gilman, senior scholar in competition policy at the International Center for Law & Economics, said it would be unorthodox to order a company to divest products acquired more than a decade ago and could potentially harm the products' functionality. He said it's difficult to see how consumers and competition would benefit from such divestitures.
Melugin said if Meta is ultimately forced to divest WhatsApp, it could pose risks to international competition in an arena in which U.S. tech giants are being challenged for their size and power within different markets. WhatsApp is a messaging app frequently used by consumers to communicate between countries.
"This is a foothold in complicated areas around the world where U.S. tech is winning," she said. "That is not putting America first, hamstringing our companies."
Makenzie Holland is a senior news writer covering big tech and federal regulation. Prior to joining Informa TechTarget, she was a general assignment reporter for the Wilmington StarNews and a crime and education reporter at the Wabash Plain Dealer.
