Meta (META.US) social empire facing breakup? FTC anti-monopoly case awaits final judgment

After seven weeks of courtroom battles, the antitrust lawsuit between Meta (META.US) and the Federal Trade Commission (FTC) has finally entered the ruling phase. The outcome of this trial, which affects the fate of the tech giant, will depend entirely on Federal Judge James Boasberg's determination of crucial issues: whether Meta is engaged in illegal monopolization in the social media market? Does its market dominance stem from the acquisitions of Instagram and WhatsApp ten years ago? The FTC accuses Meta (formerly Facebook) of consolidating its monopoly position in the "personal social networking service" market segment through the acquisitions of these two potential competitors in 2012 and 2014. If Boasberg supports the FTC's claims and deems the company guilty of illegal monopoly in this market, Meta may be forced to spin off Instagram, WhatsApp, or both businesses simultaneously. This process may take several more years to complete. If Meta wins completely, the FTC is expected to quickly file an appeal. However, Boasberg's ruling will only focus on whether the company has violated the law. If he supports the FTC, it will trigger another trial on "how to remedy the damage caused by Meta's actions." It is not clear when Boasberg will make a ruling, but it may be announced by the end of this year. A Meta spokesperson stated that the FTC's accusations are unfounded and that the trial has revealed the competitive nature of the tech industry. The FTC did not immediately respond to requests for comment at the end of the trial. However, its spokesperson had previously stated that Meta's defense "largely relies on self-serving executives and paid experts." Comprehensive divestiture of assets The FTC insists that only by completely divesting the two assets can the problem be solved. However, Boasberg has the authority to come up with his own solution: he may decide that only one of the acquisitions was illegal and require the sale of related services; or he may propose other solutions that the FTC has not considered. FTC lawyers questioned several Meta executives, including CEO Mark Zuckerberg, in Washington in recent weeks about the company's acquisition behavior and its dominant position in the social networking industry. The FTC argues that Meta monopolized a narrow market defined as "personal social networking services," focusing on sharing interactions between friends and family. Meta argues that today's social ecosystem has far exceeded traditional friend and family social interactions, with competition in areas such as short videos, e-commerce, and private messaging changing dramatically. Although some new information was revealed during the trial such as Zuckerberg proposing to divest Instagram to avoid potential regulation the outcome of the trial may depend on more nuanced controversies surrounding the definition of competitive markets. Narrow market definition Rebecca Allensworth, a law professor and antitrust expert at Vanderbilt University, says that the FTC's narrow definition of the market has always been a weak link in its accusations. She said, "They will try to argue for a very small market, as close as possible to Facebook's business scope." Allensworth added that the FTC has weakened this weak point in a clever way. "They argue that Facebook has something that other social media platforms do not have, direct contact with friends and family, which makes it a different type of product rather than a substitute for competitors," Allensworth said. Increased usage of the Meta platform during holidays indicates that people are using their product to connect with loved ones. Meta's lawyers argue that since the founding of Facebook and the acquisitions of Instagram and WhatsApp, the company's products have evolved significantly, covering functions that expand the range of competitors. While the FTC includes Snapchat as a competitor, it does not include products like TikTok, YouTube, or Apple Inc.'s iMessage. Justin Teresi, an antitrust analyst at Bloomberg Intelligence, believes that this evolution benefits Meta by naturally reshaping the competitive landscape. Decline in social sharing among friends and family Teresi states that sharing with friends and family is "no longer the main core use of Meta products," citing a recent increase in recommended content from outside users' social circles on the Meta platform. The FTC has shown that the sharing function with friends and family still exists, but has not fully demonstrated that this is still the main reason people use Meta's products. "They have become the victims of the passage of time," he added. Representatives of several other tech companies, including Reddit (RDDT.US), X, TikTok, and Pinterest (PINS.US), appeared in court during the trial, explaining how their products compete with Meta for user attention and advertising revenue. While competition does exist, Teresi believes that its help to Meta may not be as expected. He said, "If you believe that the relevant market is for advertising revenue, then you can include anything in it. You can include television, and even by will, include print media; this concept has no boundaries." It is currently unclear which way Boasberg leans. Teresi believes Meta has a 60% chance of winning, and both sides are likely to reach a settlement while waiting for the judge's ruling. While Allensworth believes the FTC has made strong accusations, she is uncertain if this is enough to support the breakup of Meta. She said, "All antitrust cases are difficult to win. In fact, I really think there may be two outcomes."