A Federal Trade Commission antitrust action against the firm has been moved to be dismissed before trial by Meta, per the request of the judge. In 2020, the Federal Trade Commission (FTC) filed a lawsuit against Meta along with 48 states and territories, attempting to compel the firm to sell Instagram and WhatsApp, which it had acquired in 2012.
The agency asserts, along with several attorneys general, that Meta, which was Facebook at the time, purchased the two sites in order to suppress competition. According to the FTC, Meta CEO Mark Zuckerberg “realized that by acquiring and controlling Instagram, Facebook would not only squelch the direct threat that Instagram posed, but also significantly hinder another firm from using photo-sharing on mobile phones to gain popularity as a provider of personal social networking.” “Like Instagram, WhatsApp posed a serious challenge to Facebook’s monopoly on personal social networking, which Facebook sought to acquire rather than challenge.”
Meta notes that not only did the FTC approve both acquisitions in the first place, but its initial complaint was dismissed for failing to to state a plausible claim. While a judge has allowed an amended complaint to move forward, Meta claims that “the agency has done nothing to build its case through the discovery process” to show that the company holds monopoly power in the “personal social networking services” market and that it caused harm to consumers and competition through the purchases.
In its motion for summary judgment, the company points out that Instagram, which accounted for nearly 30 percent of the company’s total revenue in the first half of 2022, wasn’t making any money when it bought the service for $1 billion in 2012. Instagram had just two percent of the billion-plus users it has now, Meta says, adding that it introduced features such as direct messages, livestreaming, Stories and shopping. As for WhatsApp, Meta made the service free to use, added end-to-end encryption and implemented voice and video calling.
Meta argues that it has invested billions of dollars and millions of hours of work into the apps. It claims that both Instagram and WhatsApp are in a better place as a result, to the benefit of consumers and businesses.
Elsewhere, Meta argues that the FTC failed to establish a relevant antitrust market, claiming that the agency’s definition of an “personal social networking services” market used “an artificially limited set of only four companies – Facebook, Instagram, Snapchat and MeWe – ignoring many of the most popular activities people engage in on Facebook and Instagram.” For instance, Meta points out that YouTube and TikTok offer similar short-form video features to Reels.
What’s more, the FTC’s allegation that Meta has a “dominant share” of the artificial “personal social networking services market” doesn’t hold up, according to the company. Meta says that’s because the FTC’s “market share numbers are meaningless without a properly defined market.”
Meta, which accused the FTC of wielding “structurally unconstitutional authority” against the company in a separate case last year, also took the opportunity to take more potshots at the agency and antitrust rules. “The decision to revisit done deals is tantamount to announcing that no sale will ever be final,” Jennifer Newstead, Meta’s Chief Legal Officer, wrote in a blog post. Newstead claims the Instagram and WhatsApp “lawsuit not only sows doubt and uncertainty about the US government’s merger review process and whether acquiring businesses can actually rely on the outcomes of the regulatory review process, but it will also make companies think twice about investing in innovation, since they may be punished if that innovation leads to success.”
