Meta wins FTC antitrust case focused on WhatsApp and Instagram

meta The company won a high-profile antitrust case against the Federal Trade Commission that accused it of holding a monopoly in the social networking space.

In a memorandum opinion released Tuesday, Judge James Boasberg of the U.S. District Court in Washington, D.C., said the FTC failed to prove its claims. The case, first brought by the FTC five years ago, centered on Meta’s acquisitions of Instagram and WhatsApp.

“However, regardless of whether Meta enjoyed monopoly power in the past, the agency must demonstrate that it continues to possess such power in the present,” Boasberg said in the filing. “The court’s verdict today determines that the FTC has not done so. A decision will be issued today stating that.”

Boasberg dismissed the case in 2021, saying authorities lacked sufficient evidence to prove “Facebook maintains market power.” In August of that year, the FTC filed an amended complaint detailing the company’s user numbers and metrics compared to competitors such as Snapchat, the now-defunct Google+ social network, and Myspace.

After reviewing the amendments, Boasberg ruled in 2022 that the FTC could proceed with the lawsuit, saying it provided more detail than before.

Meta CEO Mark Zuckerberg, former executive director Sheryl Sandberg, Instagram co-founder Kevin Systrom, and other current and former Meta executives testified in the trial, which began in April.

Meta stock was little changed on Tuesday. The company’s stock has risen about 2% since the beginning of the year, significantly underperforming broad indexes and most mega-cap tech stocks.

“Today’s court decision acknowledges that Meta faces intense competition,” the company said in a statement. “Our products benefit people and businesses and represent American innovation and economic growth. We look forward to continuing to partner with the administration and invest in America.”

The FTC did not respond to requests for comment.

The verdict was issued more than two months later. google The company avoided as severe punishment as possible in the antitrust lawsuit it lost last year. Although Google was found to have an illegal monopoly in its core market for Internet search, U.S. District Judge Amit Mehta rejected the Justice Department’s request, ruling that the company cannot be forced to sell its Chrome browser. However, Google was ordered to loosen its hold on search data.

In the Meta lawsuit, the FTC argued that the company should not have been allowed to buy Instagram for $1 billion in 2012 and WhatsApp for $19 billion in 2014, and the agency sought to sell those divisions. The commission also argued that there are no major alternatives to apps like Facebook and Instagram that people use to communicate with friends and family in online social spaces.

But the big challenge for the FTC, the judge said, was proving that Meta violates antitrust laws now, as opposed to just a few years ago, when social networks’ primary uses were much different and based on sharing other types of content.

“To obtain the permanent injunction sought here, the FTC must demonstrate a current or imminent violation of the law,” he wrote.

Boasberg ultimately backed Mehta’s argument that the technology industry has evolved since Facebook’s early days, and that the company now faces a wide variety of competitors like TikTok.

“While each of the meta-empirical findings is refuting, they all tell a consistent story: People treat TikTok and YouTube as alternatives to Facebook and Instagram, and the high degree of competitive overlap is economically significant,” Boasberg wrote. “For that unmistakable pattern, the FTC has shown no empirical evidence of displacement.”

Many of Judge Boasberg’s conclusions were built on the changes that have occurred in the social media market in recent years and Meta’s changing position within it. User trends are largely moving towards video, and TikTok and YouTube have huge user bases and huge network effects.

“Thus, the most used parts of Meta’s app are indistinguishable from those of TikTok and YouTube,” Boasberg wrote.

Boasberg explained that there is ample evidence that “consumers are reallocating huge amounts of time from Meta’s apps to those and other services,” which “has forced Meta to invest significant amounts of cash to keep up.”

“Meta is not a monopoly isolated from competition,” he wrote. “The court finds that the evidence in favor of Mehta on this issue is reliable and persuasive.”

Boasberg also cited various documents and testimony from “industry insiders” that show how other tech companies like TikTok and YouTube view Meta as a serious competitor.

“TikTok and YouTube pursued Meta’s products as a competitive threat,” Boasberg wrote.

Attention: FTC Chair on Independence