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The U.S. Federal Trade Commission (FTC) initiated its antitrust trial against Meta on Monday, alleging that the company has established an unlawful monopoly in the technology sector.
Mark Zuckerberg, the CEO of Meta, appeared as the initial witness in the trial held at the U.S. District Court for the District of Columbia. The FTC’s complaint revolves around Meta’s argument that it holds a monopoly over the “personal social networking” industry, pointing to its acquisitions of Instagram for $1 billion in 2012 and WhatsApp for $19 billion in 2014.
During his testimony, Zuckerberg was presented with an email he had sent in 2011 discussing Instagram’s rapid growth, as well as another from 2012 expressing concerns that Facebook was “taking too long to catch up” with Instagram’s progress.
The FTC’s lead attorney, Daniel Matheson, argued that these emails illustrate a recognition of Instagram as a potential threat, claiming that Meta was compelled to spend a significant sum rather than competing effectively. This dynamic, he asserted, showcased an attempt to suppress competition through acquisitions rather than innovation.
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Zuckerberg defended his prior statements, contending that the emails reflected initial considerations regarding the purchase of Instagram and emphasized that his interest lay more in the company’s camera technology than in its social networking capabilities.
Zuckerberg is slated to return to the witness stand on Tuesday, and the FTC intends to call additional witnesses, including Instagram’s Head Adam Mosseri and former Meta Chief Operating Officer Sheryl Sandberg, in the coming weeks.
The duration of the trial is estimated to potentially extend over two months.
Why Is Meta on Trial?
The FTC has accused Meta of violating competition laws with its acquisition strategies, claiming that the purchases of Instagram and WhatsApp were primarily motivated by a desire to reduce competition and sustain its monopolistic hold. It alleges that Meta has employed a “buy-or-bury” tactic against its rivals, acquiring competitive firms or attempting to undermine them, as purportedly seen in its dealings with Snapchat.
In response, Meta has countered the FTC’s claims by emphasizing that its acquisitions were reviewed and approved by antitrust regulators at the time, asserting that they did not pose a threat to competition.
Since Meta provides free access to its social media services, the FTC will focus on demonstrating that the acquisitions of Instagram and WhatsApp have negatively impacted consumers through increased advertising and diminished privacy safeguards, rather than through elevated pricing.
If the FTC successfully establishes that these acquisitions were illegal, the court may consider measures to dismantle Meta’s current structure, potentially forcing the sale or spin-off of Instagram and WhatsApp. Currently, Meta’s market capitalization stands at over $1.3 trillion.
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What Are the Experts Saying About the Meta Trial?
Laura Phillips-Sawyer, an associate professor of business law at the University of Georgia, shared insights with BBC, stating that the FTC may face significant challenges in this case, noting that Meta has credible competitors like Snapchat within the personal networking space.
Jo Ling Kent, senior tech correspondent for CBS News, also remarked that a potential spin-off of Instagram would have painful implications for Meta, particularly concerning its advertising revenue.
Gene Kimmelman, a former senior official at the Department of Justice, remarked to The New York Times that this trial represents a crucial examination of whether existing antitrust laws can effectively reverse mergers that may have compromised competition.
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