In a significant legal victory for the tech giant, a US court has dismissed a major antitrust challenge against Meta Platforms Inc., the parent company of Facebook, effectively allowing it to retain ownership of Instagram and WhatsApp. The ruling delivers a substantial setback to US regulators who had sought to dismantle Meta's social media empire.
The Court's Verdict and Key Arguments
U.S. District Judge James Boasberg issued the decisive ruling on Tuesday, concluding a historic antitrust trial that wrapped up in late May. In his verdict, Judge Boasberg stated that the Federal Trade Commission (FTC) failed to prove that Meta currently holds a monopoly in the dynamic social networking landscape.
The judge noted that the FTC continued to argue that Meta competes with the same rivals as it did a decade ago and maintained its position through anti-competitive acquisitions. However, he emphasized that the agency must demonstrate that Meta holds monopoly power now, not just in the past, and concluded it had not met this burden of proof.
The FTC's core argument hinged on an internal strategy allegedly expressed by CEO Mark Zuckerberg in 2008: "It is better to buy than compete." The agency contended that Facebook systematically identified and acquired potential rivals it viewed as serious threats, a claim central to the lawsuit.
Zuckerberg's Testimony and a Changing Digital World
During his testimony in April, Mark Zuckerberg countered the FTC's narrative that Facebook acquired Instagram primarily to neutralize a competitor. When questioned by FTC attorney Daniel Matheson about decade-old emails, Zuckerberg downplayed their significance. He stated that these early communications did not fully capture his rationale for the acquisition and represented only initial considerations.
Judge Boasberg's ruling heavily emphasized the profound transformation of the social media ecosystem since the FTC first filed its lawsuit in 2020. He pointed to the meteoric rise of TikTok, which was not even mentioned in earlier court opinions from 2021 and 2022 but now "holds center stage as Meta's fiercest rival."
Quoting the Greek philosopher Heraclitus, Boasberg wrote, "that no man can ever step into the same river twice," analogizing that the online world of social media is equally fluid. The clear boundaries that once separated social networking and social media apps have since broken down, making the FTC's narrow market definition outdated.
The Acquisitions That Shaped Meta
The legal battle centered on two landmark acquisitions:
- Instagram (2012): Facebook purchased the then-niche photo-sharing app, which had no ads and a cult following, for $1 billion in cash and stock. The deal's value later adjusted to approximately $750 million after Facebook's stock dip post-IPO. This was Facebook's first major acquisition where it kept the app running as a separate entity.
- WhatsApp (2014): The messaging platform was acquired two years later in a massive $22 billion deal.
These acquisitions were pivotal in helping Facebook transition its business from desktop to mobile and remain relevant with younger users as new competitors like Snapchat and TikTok emerged. The FTC's complaint, however, defined Meta's competitive market narrowly, excluding platforms like TikTok, YouTube, and Apple's messaging services from being considered direct rivals to Instagram and WhatsApp.
This ruling stands in contrast to recent legal outcomes for other tech giants, following two separate rulings that branded Google an illegal monopoly in search and online advertising.
