Meta Platforms Inc. is under intense scrutiny as the Federal Trade Commission (FTC) seeks to prove that the company unfairly dominated the social media market through its acquisitions of Instagram and WhatsApp. The unprecedented antitrust trial, presided over by U.S. District Judge James Boasberg, is currently in progress. It will stretch for several weeks and feature major witnesses such as Meta CEO Mark Zuckerberg, former COO Sheryl Sandberg, and Instagram co-founder Kevin Systrom.
First, the FTC alleges that Meta’s 2012 purchase of Instagram for $1 billion was anti-competitive and should be undone. They claim it significantly limited the development of future competitors. According to research firm eMarketer, Instagram is anticipated to account for more than half of Meta’s advertising revenue in the United States by 2025, highlighting the platform’s significant role within Meta’s overall business strategy.
In fact, during the trial itself, Zuckerberg testified that the competitive landscape at the time of Instagram’s acquisition was quite different. Zuckerberg even confessed that Meta was already working on its own competitor, Facebook Camera to the Congressional committee. As he pointed out the struggle they had in making a new Tik Tok like app that could keep up with Instagram’s new speedy development cycle.
“Instagram is growing so much faster than us that we had to buy them for $1 billion.” – Mark Zuckerberg
In response to FTC questioning, Zuckerberg conceded that it would have been very difficult for Meta to create a successful competing app. He knew the challenges that lay behind applications such as Instagram. He was adamant when he said, “I’m sure we would have been able to build an app. But as Reilly noted, past efforts to spin off new apps usually ended up going for naught.
Here’s what Zuckerberg had to say about Facebook’s Messenger app and how it stacks up against WhatsApp. It’s important to remember that two years after Zuckerberg’s initial email exchange with Sandberg, Meta acquired WhatsApp. When looking at META Messenger, he noted that Messenger can’t even keep up with WhatsApp. This just goes to show how important strategic acquisitions are to Meta’s growth.
Is the FTC right to seek a breakup of Meta? The FTC claims that Meta has leveraged its substantial market power to engage in anti-competitive practices. As the trial moves forward, it will further expose the tactics that big tech companies employ to retain their monopolistic control. These tactics are more important than ever in rapidly developing markets.
Leave a Reply