Last week Mark Zuckerberg took the stand in an antitrust trial brought by the FTC that could result in the breakup of Meta's social networking conglomerate. The case concerns whether the company's 2012 acquisition of Instagram for $1B and 2014 purchase of WhatsApp for $19B was anticompetitive and done to box out competitors.
The first complaint for injunctive relief claims that “Facebook's course of conduct has eliminated nascent rivals,” and that US social media users didn't have “the benefits of competition, including increased choice, quality, and innovation.”
Meta disagrees with the FTC's case and says that the company operates in a “dynamic and hypercompetitive space,” with platforms like YouTube and TikTok currently offering steep competition to its platforms.
Here are some highlights from the trial:
- A 2012 e-mail was revealed where Zuckerberg suggested that Facebook could buy Instagram to “neutralize a potential competitor.”
- Another message from Zuckerberg exhibited at trial suggested Facebook try to buy Snapchat for $6B and prepare for the aftermath. The message wrote, “We should probably prepare for a leak that we offered $6b… and all the negative [attention] that will come from that.”
- Zuckerberg said during the trial that TikTok is a “highly urgent” concern since its rise in 2018 and that TikTok's popularity has significantly impacted Meta's growth.
- Meta's board of directors considered offering ad-free Facebook subscriptions as far back as 2018 after the Cambridge Analytica data scandal broke in response to the backlash.
- Google, Apple, and Snap weren't happy about Meta's poorly-redacted slides, which contained easy-to-remove redactions. Attorneys for Apple and Snap called the errors “egregious,” with Apple indicating that it may not be able to trust Meta with its internal information in the future.
- The FTC considers the privacy-first social network MeWe to be a big competitor to Facebook, even though it only boasts 20M members.
- In e-mails from 2022, Meta executives acknowledged that Facebook's cultural relevance was decreasing and mulled different visions for its future to boost success.
- At one point, Zuckerberg considered ditching the Friends format and even suggested deleting everyone's Facebook friends and having them start again.
It is currently the FTC's responsibility to prove that Meta's acquisitions harmed consumers and the market, while Meta has to convince the court that the FTC's case is political. So far, Meta has accused the FTC of shifting its marketing definition to punish tech giants for their success.
In a blog post published last week, Meta accused the FTC of lobbing a “weak case” that “ignores reality” and insists that the FTC has “gerrymandered a fictitious market” to exclude Meta's actual rivals including TikTok, X, YouTube, and LinkedIn.
If the FTC proves its case, it could pursue a breakup of the company, requiring Meta to spin off WhatsApp and Instagram — the latter which would be a big hit to Meta's revenue, as Instagram brings in more than half of its US ad revenue.
In other bad news for Meta this week… A gym in South Carolina is suing the company for allegedly overcharging Facebook advertisers a collective $4B, starting in 2013 and continuing for at least four years. The class-action complaint claims that a flawed Facebook ad auction system overcharged advertisers due to a coding error that replaced the promised “second price” model with a “blended price” system, and that Facebook knowingly delayed fixing the issue to avoid destabilizing its ad platform and disclosing the problem to investors, despite internal estimates that the error cost advertisers $1B annually.