Meta will have to face The Federal Trade Commission (FTC) antitrust lawsuit against the company’s acquisition of WhatsApp and Instagram, according to a recent court order in the United States. This lawsuit will look at Meta’s monopoly in the Personal Social Networking (PSN) service market and will seek to have the company divest its WhatsApp and Instagram.
The authority first filed this lawsuit in 2020 only for the court to dismiss the same in June 2021, stating that the FTC did not adequately back up its claims about the company’s monopoly. FTC then filed a fresh lawsuit in August 2021 which the court approved in 2022. Then, earlier this year, Meta tried to get the court to dismiss the lawsuit.
What does the lawsuit claim?
FTC’s amended complaint from August 2021 states that Meta (then Facebook) was concerned about internet usage on mobile devices and as such, decided to acquire competitors. The authority mentioned that the company “supplemented its anti-competitive shopping spree with an open-first-close-later scheme that helped cement its monopoly by severely hampering the ability of rivals and would-be rivals to compete on the merits,” as per a 2021 MediaNama report. While the lawsuit only focuses on WhatsApp and Instagram, FTC also brings in examples of other comparable services that Meta offers namely, ‘Stories’ on Meta platforms and their similarity to Snaps and MeWe a privacy focused social media service. The authority also brings up the fact that Meta’s platforms lack interoperability (for instance you cannot use WhatsApp to text someone who uses Telegram instead, which constitutes anti-competitive conduct.
Meta, on the other hand, explains that when it submitted a premerger notification to the FTC to acquire Instagram in 2012, although the authority sought additional information, it eventually did approve the transaction. Similarly, the authority also approved Meta’s acquisition of WhatsApp. It argues that the FTC is reversing this by calling the acquisitions anti-competitive. The company also suggests that FTC’s lawsuit can make innovators question the reliability of the regulatory process for acquiring companies. It could end up making companies “think twice” before investing in innovation, lest the innovation ends up successful and they are punished for it.
Besides WhatsApp and Instagram’s acquisition, the regulator also mentioned that Meta’s program for developers was anti-competitive as well. It mentioned that Meta originally started Facebook as an open-source platform only to later switch courses and ask developers to agree to their terms and conditions in an attempt to prevent competition.
What does the court currently say about the case?
The court believes that the FTC has provided sufficient grounds to claim that Instagram qualified as an actual competitor to Facebook and WhatsApp at the time of acquisition was a nascent threat. However, it has not agreed to FTC’s claims of Meta’s anti-competitive engagement with third-party developers. With regards to Meta, the court has approved its request to remove the anti-competition claims FTC makes with respect to interoperability. The court will meet the two parties on Zoom on November 25 to discuss the schedule for the trial.
