Yesterday saw the start of what could be a seismic antitrust trial that breaks up Meta. Or, as is sometimes the way with potentially-seismic antitrust trials, it could turn out to be a damp squib – but a very expensive and time-consuming one for the company in the spotlight.
The US Federal Trade Commission (FTC) launched the case in 2020, alleging that Facebook (as it was named at the time) was “illegally maintaining its personal social networking monopoly through a years-long course of anticompetitive conduct”.
Its acquisitions of Instagram in 2012 and WhatsApp in 2014 were key to the case, and forcing Meta to sell both off is one of the remedies being sought by the FTC.
The trial began this week, and saw the two sides immediately tangle over the definition of “personal social networking” (PSN). The FTC is using a very narrow definition of this market that only includes Facebook, Instagram and Snapchat as the “prominent market participants” alongside smaller apps like MeWe.
It excludes TikTok, YouTube, LinkedIn, X (formerly Twitter), Discord and other platforms because they’re not primarily used to “keep up with friends’ and family’s lives in one place”.
Meta’s share of the narrowly-defined ‘PSN’ market is thus huge – 78% of monthly active users and 85% of time spent according to the FTC’s opening statement slides.
Meta is taking a different view, with CEO Mark Zuckerberg taking the stand yesterday and claiming that Facebook’s main feed is less about friends and family now, and “more of a broad discovery-entertainment space” – competing with some of those excluded platforms.
His company is pushing back hard on this point. “They’ve gerrymandered a fictitious market in which Facebook and Instagram compete only with Snapchat and an app called MeWe,” it claimed in a blog post published on the eve of the trial this week.
“In reality, more time is spent on TikTok and YouTube than on either Facebook or Instagram – if you only add TikTok and YouTube into the FTC’s social media market definition, Meta has <30% market share>
The company is also banging the patriotism drum in an effort to win politicians over to its arguments.
“It’s absurd that the FTC is trying to break up a great American company at the same time the Administration is trying to save Chinese-owned TikTok,” claimed Meta. “And, it makes no sense for regulators to try and weaken U.S. companies right at the moment we most need them to invest in winning the competition with China for leadership in AI.”
There’s a long road ahead for this trial, not to mention the potential appeals if Meta were to lose initially. A relevant comparison is the landmark antitrust case involving Microsoft.
The FTC began its inquiry into that company in 1990; the trial began in 1998; a ruling ordering Microsoft’s breakup came in 2000; that order was overturned then a settlement reached in 2001; and after some more arguments the settlement was approved in 2004 – 14 years after the initial inquiry and six years after the trial opened.
In other words, there’s no immediate prospect of Meta being forced to sell Instagram and WhatsApp. For the musicians and music companies using its platforms, there are no immediate impacts.
But they may want to keep one eye on the trial, not just for popcorn-munchworthy details about how Meta runs its businesses, but also to get early warning of any potential shake-ups in the social-media sphere in the years ahead.
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