Paresh Dave, a senior writer at WIRED who specializes in tech, discusses the monumental antitrust trial against Meta. He delves into the implications of Meta's acquisitions of Instagram and WhatsApp, questioning whether these moves created an illegal monopoly in social media. The conversation touches on the FTC's claims and the potential impact on Meta’s future, including a possible breakup that could cost significant ad revenue. Dave also highlights the ongoing tensions between big tech and government intervention, shedding light on the evolving landscape of digital power.
The FTC's trial against Meta scrutinizes whether its acquisitions of Instagram and WhatsApp created an illegal monopoly, impacting market competition.
The potential outcome of the trial could force Meta to divest key assets, influencing future mergers and acquisitions within the tech industry.
Deep dives
The Instagram and WhatsApp Acquisitions
Facebook's acquisition of Instagram for about $1 billion in 2012 and WhatsApp for $19 billion two years later was part of a strategic move to solidify its presence in the social media landscape. At that time, Instagram was gaining significant traction, raising substantial venture capital, while Facebook was struggling to develop photo-sharing capabilities. The purchase of these platforms was viewed as a standard practice in Silicon Valley, reflecting how large tech companies typically absorb smaller competitors to enhance their services. Now, these acquisitions are at the center of a landmark antitrust trial, where the FTC claims that they established an illegal monopoly, raising questions about the competitive dynamics within the tech industry.
FTC's Antitrust Case Against Meta
The Federal Trade Commission alleges that Meta engaged in anti-competitive practices by acquiring competitors like Instagram and WhatsApp, effectively stifling competition in the market. As the case progresses, the FTC must demonstrate that these purchases significantly harmed consumers and reduced market competition. They argue that Facebook has maintained a dominant market share of over 80% in personal social networking services by limiting competition from emerging platforms like Snapchat and MeWe, while excluding other platforms like TikTok and YouTube from their competitive analysis. This narrow definition of market share complicates the FTC's position, as it can drastically change when broader social media platforms are considered.
Implications of the Trial's Outcome
The trial's outcome could lead to significant changes for Meta, including the potential forced divestment of Instagram and WhatsApp, both vital to its revenue streams. If Meta loses the case, the court may impose conditions that could affect future mergers and acquisitions in the tech industry, creating an environment of uncertainty for investment strategies. As other tech companies observe these proceedings, they may worry about the implications for their own acquisitions, particularly the risk of having past deals reevaluated or undone by regulatory agencies. This ongoing legal battle underscores the precarious balance between maintaining market competition and enabling innovation through mergers in the tech sector.
This week, the FTC and Meta began a trial to determine if—by adding Instagram and WhatsApp to its portfolio with Facebook over a decade ago—the company became a monopoly in social media. If Meta loses, it could be forced to split up, losing Instagram—and its substantial ad revenue.
Want more What Next TBD? Subscribe to Slate Plus to access ad-free listening to the whole What Next family and all your favorite Slate podcasts. Subscribe today on Apple Podcasts by clicking “Try Free” at the top of our show page. Sign up now at slate.com/whatnextplus to get access wherever you listen.
