Meta Wins FTC Antitrust Trial Over Instagram, WhatsApp Deals (3)

Meta Platforms Inc. won a key lawsuit Tuesday after a federal judge ruled that the company’s acquisitions of the photo-sharing app Instagram and messaging service WhatsApp don’t violate US antitrust law.

US District Judge James Boasberg in Washington said the Federal Trade Commission failed to prove the deals allowed the tech giant to illegally monopolize the social networking market.

“With apps surging and receding, chasing one craze and moving on from others, and adding new features with each passing year, the FTC has understandably struggled to fix the boundaries of Meta’s product market,” the judge wrote. “Whether or not Meta enjoyed monopoly power in the past, though, the agency must show that it continues to hold such power now. The court’s verdict today determines that the FTC has not done so.”

The decision is a massive loss for the federal government, which sued the tech giant for antitrust violations in 2020 during the first Trump administration.

The news caused Meta shares to recoup some of the day’s losses. The stock was down 0.7% to $597.71 at 1:25 p.m. in New York.

“The court’s decision today recognizes that Meta faces fierce competition,” Meta spokesperson Christopher Sgro said. “Our products are beneficial for people and businesses and exemplify American innovation and economic growth. We look forward to continuing to partner with the administration and to invest in America.”

The FTC didn’t have an immediate comment.

Zuckerberg Courts Trump

Justin Teresi, an antitrust analyst with Bloomberg Intelligence, said the FTC loss was largely expected and he would be surprised if the agency decides to appeal given the difficult odds of success.

“For years we’ve seen these cases that look to expand the bounds of how far antitrust cases go,” he said. The federal government’s high-profile loss begs the question as to whether these expensive legal pursuits are worth it. “Prosecuting an antitrust case is not cheap,” he added.

Meta Chief Executive Officer Mark Zuckerberg has spent much of the year courting President Donald Trump and his administration, including through key corporate and product changes such as eliminating hate speech rules and dismantling outside fact-checking efforts and diversity initiatives.

As Zuckerberg’s relationship to Trump improved at the outset of the year, the company engaged the FTC chair and other administration officials in an effort to try and settle the case before Zuckerberg was forced to take the stand. Those negotiations were unsuccessful.

The Facebook co-founder ultimately testified in Washington over several days in April as part of the FTC’s seven-week trial.

Meta Platforms CEO Mark Zuckerberg and US President Donald Trump during a dinner with tech leaders at the White House in Washington on Sept. 4.

Photographer: Will Oliver/EPA/Bloomberg

Zuckerberg returned to the nation’s capital this September for a high-profile dinner of technology executives, where he was seated directly next to Trump, and boasted of spending $600 billion in the US through 2028.

Read more: Mark Zuckerberg Loves MAGA Now. Will MAGA Ever Love Him Back?

At trial, the FTC argued that Meta, then known as Facebook Inc., bought the two companies in 2012 and 2014 rather than compete with them. Meta made the acquisitions, the FTC alleged, to reinforce its monopoly in the slice of the social networking market that’s focused on connections between friends and family.

Meta, meanwhile, argued that its competitors extend far beyond traditional friends and family sharing to include short-form video, commerce and private messaging. The company also called representatives from several other tech companies, including Reddit Inc., X, TikTok, and Pinterest Inc., to testify about how their products compete with Meta’s for user time and attention — and thus for advertising dollars.

The Meta case is one of five major antitrust lawsuits filed by the FTC or Justice Department against the world’s largest technology platforms. Two federal judges have already ruled that Alphabet Inc.’s Google illegally monopolized online search and advertising markets, while suits against Amazon.com Inc. and Apple Inc. remain pending.

TikTok, YouTube Competition

In his decision, Boasberg rejected the FTC’s contention that Meta’s apps, Facebook and Instagram, are primarily used for “personal social networking” while others, such as ByteDance Ltd.’s TikTok and Alphabet Inc.’s YouTube are video entertainment apps.

The four platforms have “evolved to have nearly identical” features, the judge wrote, and “the evidence resoundingly shows that” users treat TikTok and YouTube as alternatives to Meta’s app.

“The FTC’s hypothesis about how people use these apps is consistently disproven by the data,” Boasberg wrote. TikTok and YouTube “compete fiercely over a meaningful share of Meta’s business.”

Meta’s market share also appears to be falling when looked at as total time spent on apps, the judge said. By that measure, Boasberg said, Meta’s share is less than 50%, though he redacted the exact share the company offered.

“The court ultimately finds that YouTube and TikTok belong in the product market, and they prevent Meta from holding a monopoly. Even if YouTube is out, including TikTok alone defeats the FTC’s case,” he wrote.

One avenue for appeal would be the judge’s focus on measuring the market today rather than from 2020 when the FTC’s cases was originally filed, said Rebecca Haw Allensworth, an antitrust professor at Vanderbilt Law School.

“It’s not inevitable to think about the market that way,” said Allensworth, who specializes in antitrust involving the tech platforms.

In a normal administration, an appeal would be likely given the amount of money and resources that have already been spent on the case, she said. Although the case was filed during the first Trump administration, there’s no guarantee this one will continue with it, she said.

“The Trump administration isn’t making decisions on competition policy alone,” she said.

To contact the reporters on this story:
Leah Nylen in Washington at lnylen2@bloomberg.net;
Riley Griffin in Washington at rgriffin42@bloomberg.net;
Josh Sisco in San Francisco at jsisco6@bloomberg.net

To contact the editors responsible for this story:
Sara Forden at sforden@bloomberg.net

Elizabeth Wasserman

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