Your Honor, the FTC Calls Mark Zuckerberg
Flanked by two bodyguards, Meta’s CEO solemnly strode into a Washington, DC courtroom. Despite his last-ditch efforts to avoid a trial, he was there, jaw clenched, to defend his company from being broken up by the US government.
The FTC’s Case
The Federal Trade Commission’s lead attorney for the case, Daniel Matheson, asked Zuckerberg to reflect back on when Facebook was the underdog. "In hindsight, you’re glad you didn’t sell to MySpace?" Matheson asked.
"Yes," Zuckerberg responded.
Over the next several hours of questioning, Matheson walked Zuckerberg down memory lane to the period just before Facebook’s $1 billion acquisition of Instagram in 2012, which the FTC claims was the first in a series of anti-competitive steps that locked out other companies. In a lawsuit that was initially filed five years ago and went to trial this week, the agency argues that Meta should be forced to spin off both Instagram and WhatsApp, which it later acquired for roughly $19 billion in 2014.
The Acquisition of Instagram
While on the stand, Zuckerberg seemed to slowly relax as he recounted major moments from Facebook’s early history, from the launch of the News Feed to the company’s rocky transition to mobile phones in 2012. Considerable time was spent asking him about Facebook’s founding mission to connect friends and family, and how early rivals like Path and Google Plus challenged that use case.
When asked to confirm that he has been Meta’s "sole decision maker" and controlling shareholder since 2006, he quickly nodded his head twice and said, "Yes."
Meta’s Defense
Later in the day, the FTC started to hone in on the Instagram acquisition. Matheson showed internal emails in which Zuckerberg warned colleagues that Instagram’s early rise was "really scary" for Facebook. In other emails, he complained about the slow pace of development of Facebook’s own photos app, Facebook Camera, and described members of the team as "checked out."
"We really need to get our act together quickly on this since Instagram’s growing so fast," Zuckerberg wrote in another internal email shown to the court. In a separate exchange with an engineering executive working on Facebook Camera, Zuckerberg tried to instill a sense of urgency: "If Instagram continues to kick ass on mobile or if Google buys them, then over the next few years they could easily add pieces of their service that copy what we’re doing now."
The Trial’s Next Steps
Even if it can prove that Meta has monopoly power in a relevant market, the FTC will also have to show over the coming weeks that the company illegally acted to achieve or maintain its dominant position.
To hear Meta retell it, the company saw opportunities where it could invest and grow fledgling products into now-massive apps used around the world. But the FTC argues that, like Zuckerberg’s early refusal to sell to MySpace, Instagram and WhatsApp would have been just fine on their own.
Conclusion
The trial is ongoing, and it remains to be seen how the court will rule. One thing is certain, however: the outcome of this case will have significant implications for the tech industry and the way we use social media.
FAQs
Q: What is the purpose of the FTC’s lawsuit against Meta?
A: The FTC is seeking to break up Meta, arguing that the company has a monopoly on personal social networking services.
Q: What is the FTC’s definition of a monopoly?
A: The FTC defines a monopoly as a company that has the power to control prices or exclude competitors from a market.
Q: What is Meta’s defense against the FTC’s claims?
A: Meta argues that it has a legitimate business reason for acquiring Instagram and WhatsApp, and that it has not engaged in anti-competitive behavior.
Q: What are the potential consequences if the FTC is successful in its lawsuit?
A: If the FTC is successful, Meta could be forced to spin off Instagram and WhatsApp, which could lead to significant changes in the way the company operates.
