Meta Wins FTC Antitrust Trial Centered on WhatsApp & Instagram

In a significant victory for the tech giant, Meta Platforms (META) has prevailed in its antitrust battle against the Federal Trade Commission (FTC). A U.S. District Court judge ruled in favor of Meta, dismissing the FTC’s claim that the company holds a monopoly in the social networking market.

Judge James Boasberg of the U.S. District Court in Washington, D.C., stated in a memorandum opinion released Tuesday that the FTC failed to adequately substantiate its allegations. The FTC’s case, initiated five years prior, primarily challenged Meta’s acquisitions of Instagram and WhatsApp, arguing they stifled competition.

“Whether or not Meta enjoyed monopoly power in the past, though, the agency must show that it continues to hold such power now,” Boasberg said in the court filing. “The Court’s verdict today determines that the FTC has not done so.”

This isn’t the first time Judge Boasberg has weighed in on this case. He initially dismissed the FTC’s complaint in 2021, citing insufficient evidence to prove Meta’s market dominance. While the FTC subsequently filed an amended complaint with more detailed user data and metrics comparing Meta to competitors like Snapchat, Google+, and Myspace, it ultimately wasn’t enough to sway the court.

Joe Simonson, the FTC’s director of public affairs, expressed disappointment with the ruling, hinting at potential further action by stating, “We are deeply disappointed in this decision… We are reviewing all our options.”

The trial involved testimony from key figures, including Meta CEO Mark Zuckerberg, former COO Sheryl Sandberg, and Instagram co-founder Kevin Systrom, highlighting the importance of the case and the resources both sides invested in the legal proceedings.

Following the ruling, Meta shares experienced a slight dip, decreasing by less than 1%. However, with the stock up approximately 2% year-to-date, it’s significantly lagging behind broader market indexes and many of its Big Tech counterparts. This underperformance underscores the ongoing scrutiny and challenges Meta faces despite this legal win.

Jennifer Newstead, Meta’s chief legal officer, released a statement emphasizing the company’s view that the ruling “recognizes that Meta faces fierce competition” and that its “products are beneficial for people and businesses.” She further stated the company’s commitment to “partnering with the Administration and to invest in America.”

This ruling comes on the heels of Google successfully navigating its own antitrust case, avoiding the forced sale of its Chrome browser. These outcomes suggest a more nuanced approach from the judiciary regarding antitrust enforcement in the rapidly evolving tech landscape. While Google was ordered to loosen its grip on search data, the preservation of Chrome was a significant win.

The core of the FTC’s argument against Meta centered on the acquisitions of Instagram and WhatsApp, claiming they eliminated potential competitors. The FTC sought to force Meta to divest these assets, arguing that they dominate the market for online social communication apps.

However, Judge Boasberg’s decision highlighted a critical flaw in the FTC’s case: proving current antitrust violations. The judge emphasized that the social media landscape has undergone a dramatic shift, particularly with the rise of short-form video platforms.

“To win the permanent injunction that it seeks here, the FTC must prove a current or imminent legal violation,” he wrote, underscoring the importance of demonstrating present-day harm to competition.

The court ultimately sided with Meta’s argument that the rise of platforms like TikTok and YouTube represents a significant competitive challenge that Meta must actively address. This acknowledges the evolving nature of consumer behavior and the dynamic competitive forces within the digital space.

“While each of Meta’s empirical showings can be quibbled with, they all tell a consistent story: people treat TikTok and YouTube as substitutes for Facebook and Instagram, and the amount of competitive overlap is economically important,” Boasberg wrote. “Against that unmistakable pattern, the FTC offers no empirical evidence of substitution whatsoever.”

A key factor in Judge Boasberg’s decision was the transformation of the social media landscape, particularly the shift towards video-centric platforms. TikTok and YouTube have amassed massive user bases, creating powerful network effects that Meta must contend with.

“The most-used part of Meta’s apps is thus indistinguishable from the offerings on TikTok and YouTube,” Boasberg wrote, acknowledging the convergence of content formats and user preferences across platforms.

Judge Boasberg emphasized the substantial evidence demonstrating a shift in consumer behavior, with users allocating “massive amounts of time from Meta’s apps” to competing platforms. This has forced Meta to make significant investments to maintain its competitive position. These investments include heavy expenditure in Reels, their short-form video platform and AI capabilities.

“Meta is not a monopolist insulated from competition,” he concluded. “The Court finds the evidence favoring Meta on this issue both credible and convincing.”

Further bolstering his decision, Judge Boasberg cited internal documents and testimony from industry insiders, revealing that companies like TikTok and YouTube recognize Meta as a formidable competitor.

“TikTok and YouTube tracked Meta’s products as competitive threats,” he wrote, further validating Meta’s argument that it operates within a highly competitive market.