US tech giant Meta – formerly Facebook – survived on Tuesday when US District Judge James Boasberg ruled in its favor in a major antitrust case filed by the US Federal Trade Commission (FTC) in 2020 and scheduled to conclude in May.
The case posed an existential challenge to the company, with allegations that it had bought Instagram and WhatsApp to avoid competition. An adverse decision would have forced the company to part ways with Instagram and WhatsApp.
“The landscape that existed only five years ago, when the Federal Trade Commission brought this antitrust lawsuit, has markedly changed,” Judge Boasberg said. “While it might once have made sense to split apps into separate social networking and social media markets, that wall has since been torn down.”
Boasberg said, “Regardless of whether Meta has enjoyed monopoly power in the past, the agency must show that it still has such power. Today’s decision by the Court determines that the FTC has not done so.”
What was the allegation against Meta?
The Federal Trade Commission, or FTC, is an independent US agency tasked with the Department of Justice to enforce civil antitrust laws as well as protect consumers.
Prosecutors representing the FTC argued that Meta, following Facebook/Meta CEO Mark Zuckerberg’s 2008 adage, “It is better to buy than compete”, systematically tracked and bought companies it viewed as competitive threats.
Zuckerberg has since tried to downplay such attitudes, and in testimony in April said Facebook did not buy Instagram in 2012 to neutralize it. However, he acknowledged that internal emails circulated at the time of his purchase — $1 billion and stock options — did not fully reflect his true enthusiasm for the non-monetized photo-sharing app.
Instagram was the first company purchased by Facebook that was not dismantled or destroyed, but rather was allowed to run as an individual app.
The FTC claimed that Facebook had created policies to make it difficult for smaller rivals to enter the market and to “neutralize perceived competitive threats” just as the world was beginning to shift from desktop computers to mobile devices.
The move allowed Meta to connect with a younger audience than its parent social network, Facebook, as it competed with emerging platforms like Snapchat and later TikTok.
In his ruling, Boasberg said that prosecutors had failed to prove a “present or imminent legal violation” by the company.
How did Meta react to the decision?
The FTC argued that Facebook, Instagram, and Snapchat competed in a distinct market of “connecting friends and family” that was different from video entertainment platforms like YouTube or TikTok.
However, in his decision, Boasberg said that this distinction no longer applies in today’s social media landscape, noting how both Facebook and Instagram have evolved to display algorithmically recommended short videos, like TikTok.
The court said that only 7% of Instagram users today spend their time primarily watching content from friends rather than watching short videos or reels.
“Thus Facebook, Instagram, TikTok, and YouTube have evolved with nearly identical core characteristics,” Boasberg wrote.
Meta welcomed Judge Boasberg’s recognition that the company “faces intense competition.”
CEO Zuckerberg made several attempts to get President Donald Trump to intervene on his behalf and dismiss the case but to no avail.
Since Trump’s return to the White House, Zuckerberg and other US tech giants have donated huge amounts of money to him. In turn, Trump has tried to forcefully boost big American tech companies and the billionaires who own and run them.
On Tuesday, Meta’s chief legal officer said, “Our products are beneficial to people and businesses and exemplify American innovation and economic growth. We look forward to continuing to partner with the administration and invest in America.”
Edited by: Zack Crellin