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The increasing scrutiny of Meta’s influence in the social media landscape has prompted a significant legal challenge from the Federal Trade Commission (FTC). Recently, I observed a pivotal courtroom session in Washington, D.C., where Mark Zuckerberg testified in defense of his company amid allegations that its acquisitions of Instagram and WhatsApp were anticompetitive in nature.
During the proceedings, he faced probing questions about whether he aimed to eliminate competition. However, one of the more striking aspects of the trial was the FTC’s apparent miscalculation in defining the scope of competition in social media. To establish its claim that Meta holds a monopoly, the FTC created a narrow classification it calls “personal social networking services,” focusing primarily on platforms designed for sharing personal content among users. This restrictive definition oddly excludes popular private messaging apps, framing Meta’s only serious competition as Snapchat and MeWe, a less-known, blockchain-based network with dubious user numbers.
This selective market definition conveniently portrays Meta as possessing a dominant market share of around 80%, effectively granting it a de facto monopoly status in the United States. However, the FTC’s lead attorney, Daniel Matheson, notably did not question Zuckerberg about MeWe at all during his approximately 13-hour testimony. Only when questioned by Meta’s legal team did Zuckerberg admit he was unfamiliar with MeWe prior to the litigation.
Though wrestling with the complexities of defining the relevant market for antitrust accusations is undoubtedly challenging, Judge James Boasberg may ultimately bypass the FTC’s narrow categorization in favor of a more comprehensive understanding of the digital marketplace. Recent judicial decisions have leaned toward the government’s favor in several antitrust cases against major tech firms, particularly following Google’s adverse ruling in an advertising technology lawsuit. Meanwhile, FTC Chair Andrew Ferguson has steered the narrative towards a defense of free speech, aiming to rally public support that transcends the courtroom.
The core issue, however, lies not solely in the legality of past acquisitions but in understanding the fundamental dynamics of Meta’s enduring success, which is powered by undeniable network effects. The more users sign up to a social platform, the more challenging it becomes for competitors to disrupt that network. Although the lawsuit does reference these network effects as a source of Meta’s strength, they do not form the central argument of the case.
Historically, Zuckerberg has successfully harnessed network effects to expand his empire: Facebook was used to bolster Instagram, and the infrastructure built around these platforms facilitated the staggering growth of WhatsApp, which boasts nearly three billion users. Currently, Meta continues this strategy, utilizing Instagram to promote Threads and integrating new features across its applications.
As Zuckerberg pointed out during his testimony, once an app reaches a certain size, it is naturally positioned to diversify and expand into new areas. This itself can pose antitrust challenges—take Google, for example, which faces allegations of leveraging its market strength in one area to dominate another. Yet, simply fragmenting Meta will not address the root causes of its market power.
Dividing Instagram and WhatsApp into separate entities might create initial competition, but for sustainable competition to thrive, users must retain the ability to shift their profiles and friend connections to new platforms—a complex endeavor fraught with privacy implications and regulatory challenges. Nonetheless, public interest in this kind of user autonomy can be seen in the enthusiasm surrounding platforms like Bluesky and the integration of ActivityPub into Threads.
The FTC’s case against Meta has only just begun, with potential evidence yet to emerge that could illuminate whether a breakup is warranted. Nevertheless, early proceedings suggest that the government’s case may be failing to capture the broader picture.
OpenAI’s Expanding Horizons
In the rapidly evolving tech landscape, few companies are pushing boundaries with as much vigor as OpenAI. This week saw the introduction of advancements including GPT-4.1, o3, and o4-mini, alongside reports of negotiations to acquire Windsurf, the startup renowned for the AI coding tool Codeium, for approximately $3 billion. Additionally, whispers are circulating about CEO Sam Altman’s covert development of a new social networking platform. OpenAI’s ambitions now appear to encompass aspirations that meld the capabilities of industry giants like Google, Meta, and Apple.
Rapid Updates
The tech sector remains dynamic, with notable developments including Nvidia CEO Jensen Huang making his way to China after U.S. restrictions on chip exports; Blue Origin launching notable personalities, like Lauren Sánchez and Katy Perry, into space; and Anthropic developing its own AI voice assistant to rival OpenAI.
Noteworthy Career Movements
As OpenAI broadens its focus, there are significant personnel changes; its former AI preparedness head Joaquin Quiñonero Candela is transitioning to explore applications of AI in healthcare. In addition, Sachin Katti has been appointed as Intel’s chief technology officer amidst a reorganization led by new CEO Lip-Bu Tan. Grace Kao has taken on the role of chief marketing officer at Snap, while Match Group’s Will Wu departs to dive deeper into AI.
Amidst these shifts, Reed Hastings continues to scale back his involvement with Netflix, transitioning to a non-executive director role. Bluesky is on the lookout for a head of product, and Google is seeking a “post-AGI” AI scientist.
Source
www.theverge.com