Meta’s moved to dismiss a pending lawsuit from the F.T.C., which was originally filed in 2020, and seeks to force Meta to divest both WhatsApp and Instagram, under the premise that both were acquired to eliminate competition in the market, in violation of antitrust laws.
The F.T.C.’s original suit claimed that Meta “engaged in a systematic strategy to eliminate threats to its monopoly”, which included the acquisitions of Instagram and WhatsApp, who were considered rivals in the market. That original case was dismissed a year later, because the F.T.C., according to the court, failed to establish that Meta had monopoly power in the social media market.
The F.T.C. was then granted permission to re-state its case in 2022, which is now looming as an ongoing concern for the social media giant.
And now, Meta’s moving to kill it off completely.
As per Meta:
“Today, we filed a motion for summary judgment, asking the District Court to dismiss the Federal Trade Commission’s effort to unwind the decade-plus acquisitions of Instagram and WhatsApp. From the very beginning, the FTC has failed to state a plausible claim, and the agency has done nothing to build its case through the discovery process to prove otherwise.”
Meta argues that it continues to face significant competition in the market, from rivals like X, YouTube, TikTok and Snapchat, among others.
In this sense, the rapid growth of TikTok has actually been a blessing for Meta in some ways, because it shows that a new challenger can emerge and become a significant player in the space. If Meta held monopoly power, as the F.T.C. claims, then this could not happen, while YouTube also generates tens of billions in revenue every year.
Meta has, of course, benefited significantly from its acquisitions as well. Instagram now generates an estimated 30% of Meta’s annual income, while WhatsApp, the most used messaging platform in the world, is also developing more and more business opportunities.
Clearly, Meta has been a big winner overall in both cases, but Meta’s argument is that both apps are only as big as they are now due to its skill and expertise in social app development. In other words, the apps themselves have benefited from being acquired by Meta, as much as Meta has gained from taking them on.
“Even if the FTC did have a basis for its claims that the deals harmed consumers, the evidence shows the opposite. In reality, our significant investment of time and resources since acquiring the two apps has made them into the services that millions of users enjoy today for free.”
Which is difficult to argue against, and it does seem like Meta has a solid claim in response to the F.T.C.’s filing.
That’s especially true in the modern social media landscape, which is a lot different to what it was when the F.T.C. originally launched its push four years back.
Since then, Meta has also undertaken a process to merge its messaging platforms in order to implement interoperability, with the focus being on enabling users to cross-communicate via its various messaging apps. But speculation has also been that Meta undertook this exercise to protect against any divestment push, because once the back-end element of its apps are welded together, it can more competently argue that it cannot uncouple them, even under court order.
That’s always seemed like a vague failsafe, but essentially, Meta’s argument seems to hold that it doesn’t have a monopoly hold on the social media market.
“The FTC has failed to meet its burden to present evidence establishing a relevant antitrust market and proving that it has included all reasonable substitute services in its market definition. Instead, its alleged “personal social networking services” market is a textbook example of a gerrymandered market, using an artificially limited set of only four companies – Facebook, Instagram, Snapchat, and MeWe – ignoring many of the most popular activities people engage in on Facebook and Instagram.”
Again, the rise of TikTok has been a benefit here, and it’s interesting to consider how Meta has used TikTok’s growth in a strategic sense to dilute the F.T.C.’s argument.
The court will now need to decide on next steps, which could see Meta finally freed of the breakup threat. Or it’ll go ahead, and Meta will need to revise its plan to oppose the sell-off push.
