Over the course of a six-week trial, the Federal Trade Commission and Meta delivered their arguments to the U.S. District Court Judge James Boasberg, who could deliver a landmark decision poised to disrupt the digital platform market. For decades, lax regulation and enforcement policies have allowed Big Tech companies to achieve behemoth status in the market. As industry and advocates await Judge Boasberg’s decision, many are rightfully skeptical, as judicial precedent and current antitrust enforcement seemingly grant Big Tech companies unbridled power to supposedly preserve “innovation.” Pointedly, the FTC v. Meta case will decide whether Meta may continue to feast on the fruits of its social media trifecta, or whether the company will receive a crippling blow that makes it think twice about its eating habits.
The FTC argues that in order to maintain its monopolistic power, Meta has adopted the defensive strategy of ”it is better to buy than compete.” This strategy has led to Meta gaining an anticompetitive advantage which has disrupted the social media market through limiting the choices that users have between accessing diverse platforms and making it difficult for users to switch to another platform. In response to the complaint, Meta argues that its acquisitions of digital platforms WhatsApp and Instagram do not establish platform dominance and thus, are not illegal. However, even if their claims hold up under scrutiny, the FTC’s Meta investigation uncovered many concerning competitive strategies that should give us pause.
Leading up to the trial, the case was marred with delays, revisions of complaints, and mounting scrutiny of the FTC’s success. The complaint, originally filed in December 2020 was dismissed due to insufficient evidence. This required the FTC to return to the drawing board. Under former FTC Chair Lina Khan, the agency refiled with more detailed economic analysis and internal correspondence to support its claims. Specifically, the FTC alleged that Meta engaged in a “buy-or-bury” approach, seeking to acquire emerging platforms before they become serious rivals. The FTC also provided documentation of Mark Zuckerberg and other Meta executives acknowledging that they were buying the platforms as a way to neutralize their competitive threat. It is under this revised complaint that the case was allowed to proceed.
Should the District Court decide that Meta has, in fact, established an anticompetitive monopoly in the social media market, then the company’s horizontal acquisitions of platforms Instagram and WhatsApp would be deemed illegal. Meta could then be ordered to initiate a structural or behavioral remedy that would alter its conduct to account for the anticompetitive impact of the acquisitions. Structural remedies can entail divestiture (sale of assets or business units) or dissolution (portioning the company into smaller entities) which are undertaken to restore competition by altering the fundamental structure of the company prior to its anticompetitive behavior. In the past, regarding anticompetitive horizontal mergers, agencies argued in favor of structural remedies, as they more effectively target the root of anticompetitiveness in a market. Here, the FTC’s complaint follows this approach, advocating for the divestment of Instagram and WhatsApp from Meta.
Collectively, Meta has established a social media empire valued at $1.4 trillion. Should the U.S. District Court decide on a structural remedy, it would be a tremendous financial blow to the company. Meta’s acquisition of WhatsApp, its largest purchase to date of a platform granted them over $19 billion in assets. Similarly, Meta would also be faced with divesting the source of over $1 billion in assets that it acquired from Instagram, which has since been monetized and now has an estimated value of $441 to $581 Billion. Furthermore, by divesting Instagram, Meta would lose a significant revenue source given its market share dominance in the advertisement space, as Instagram ads make up more than half of Meta’s revenue.
In practice, breaking up is hard to do. Meta has owned Instagram and WhatsApp for over a decade and has significantly upgraded and integrated its intellectual property (algorithms, services, and policies) across the platforms. For these reasons, untangling its interests from WhatsApp and Instagram would be technically challenging. Outside of the technical obstacles, Meta would likely have to relinquish Instagram or WhatsApp (or both) to a separate business unit capable of being sold to another buyer. But this could pose a number of problems. Firstly, it may be hard to find a prospective acceptable buyer to purchase them. Secondly, the technical and legal mechanics behind divestment and acquisition (particularly in regard to user data) can extend the timeline of divestment significantly. Lastly, the financial complexities of company valuation, taxable assets and liabilities pre- and post-acquisition may also complicate the sale and purchase process of the divested business entities.
Courts are often sympathetic to industry in cases of particularly “difficult,” or “expensive,” breakups and, in many instances, lean towards conduct-based remedies. Undeniably, the divestment of either platform could create a great impact on Big Tech litigation (which has not seen this level of enforcement occur in a long time). It is important to note that the courts have not ruled for a complicated breakup in more than 40 years, which we last saw with the break up of the Bell System.
If the U.S. District Court decides to impose a conduct-centered remedy, Meta may have to open up its APIs (application programming interfaces) to competitors, impose data-use limitations, or implement mechanisms for platform access. This would be a step in the right direction, but alone, could prove ineffective. Conduct remedies target specific anticompetitive harms, but they often fail to drive long-term behavioral changes. For this reason, a break up should be imposed as a deterrence to prevent Meta from continuing its cannibalistic market tactics in the future.
Despite its difficulties, breaking up anticompetitive companies is necessary and can lead to the rebalancing of the market in absence of competitive practices that caused the harm. In so, Judge Boasberg’s decision could mark a historic pushback on excessive corporate power. Meta’s subsequent divestment of either platform (WhatsApp or Instagram) can potentially influence further Big Tech litigation, creating a playbook for confronting anticompetitive conduct on digital platforms and signaling a new era of robust enforcement.
However, should Meta be found not in violation of antitrust laws, the decision will add to growing legal precedents that have swept accountability for anticompetitive harm under the rug. Regardless of its outcome, this decision will set the tone for Big Tech litigation in the near future. If Judge Boasberg finds that Meta holds a monopoly and pursues meaningful enforcement, that sends a clear and direct message to industry that it is in fact not better to buy than compete. More importantly, it signals to the public that consumer choice and fair competition are the pillars of a healthy digital marketplace.