A high-stakes antitrust trial centred on Meta’s acquisition of Instagram and WhatsApp has kicked off this week with CEO Mark Zuckerberg taking the stand to deny his company had engaged in a “buy-or-bury scheme”.
The landmark trial, filed by the US Federal Trade Commission (FTC) in 2020, began in Washington on Monday, with Zuckerberg the first witness called.
The FTC has accused Meta of operating an illegal monopoly by acquiring competitors Instagram and WhatsApp for inflated prices.
The case will have huge ramifications for Meta and the wider tech sector, with a loss potentially resulting in the company being broken up and forced to sell Instagram and WhatsApp.
The loss of Instagram would pose a significant threat to Meta’s business, with some estimates that it accounts for about half of its total US advertising revenue.
It’s also the first major test of the FTC’s ongoing focus on big tech and competition under the new Trump administration.
What the case is about
The US government has argued that Meta moved to stamp out competition threatening its reputation as the main social media platform for users to connect with their family and friends by buying its early competitors.
It has focused on the acquisition of Instagram for $US1 billion in 2012 and WhatsApp for $US19 billion in 2014.
FTC chair Lina Khan has previously labelled this tactic as a “buy-or-bury scheme”, and that the case was about upholding “free and fair trade”.
In his opening statement on Monday, FTC lawyer Daniel Matheson said the two buyouts were defensive moves to reduce competition.
“They decided that competition was too hard and it would be easier to buy out their rivals than to compete with them,” Matheson told the court.
Meta has rejected these arguments, with Meta attorney Mark Hansen labelling them “misguided” and that the apps had been acquired so the company could “improve and grow them alongside Facebook”.
In a blog post, Meta chief legal officer Jennifer Newstead said the case was weak and could deter further investment in tech.
The case will likely hinge on how Meta’s platforms are defined, with the FTC arguing it has a monopoly over communications with friends and family, while the company saying it is interchangeable with apps that more commonly allow communications with strangers as well, such as X, TikTok, YouTube and Reddit.
Meta will argue that it faces stiff competition from these platforms, along with Apple’s own messaging app.
Zuck takes the stand
Zuckerberg was the first witness called at the start of the trial, facing questions over emails sent before the acquisitions were made.
In a memo in 2012, Zuckerberg said a buyout was about “neutralising” Instagram, a line that the FTC’s lawyer said was the “smoking gun”.
Zuckerberg was also asked about an email he sent in 2011 to Facebook executives about reasons for buying Instagram and Facebook’s stalled efforts to develop the Camera app.
“In the time it has taken us to get our act together on this, Instagram has become a large and viable competitor to us on mobile photos, which will increasingly be the future of photos,” Zuckerberg said in the email.
Zuckerberg at the time also said that “Instagram seems like it’s growing quickly”.
In his testimony, the CEO said that these emails were sent “relatively early” in the acquisition discussions, and that he wanted to buy Instagram not for its social network, but for its camera technology.
In 2012, he said that Facebook was “so far behind that we don’t understand how far behind we are” and that he worried that “it will take us too long to catch up”.
Meta cosies up to Trump
The case against Meta was launched in 2020 during the first Trump administration.
In the lead-up to US President Donald Trump’s second term, Meta took steps aiming to strengthen its relationship with the administration.
Meta earlier this year also axed its fact-checkers and backed down on its previous moderation policies, and scrapped its internal diversity programs.
The FTC under the Biden government brought antitrust cases against big tech giants.
In late 2023 Google settled an antitrust suit in relation to its app store for $US1 billion.
In August last year, a US judge ruled that Google had illegally created a monopoly in the search engine industry through the violation of antitrust law and spending billions of dollars on contracts to make it the default search provider on most devices in America.
