Meta Antitrust Case Concludes; Instagram and WhatsApp Face Possible Divestiture

The antitrust case challenging Meta’s dominance in the social networking market has concluded its six-week hearing in the U.S. District Court for the District of Columbia as of May 27. Both the Federal Trade Commission (FTC) and Meta now have four months to submit written arguments. Judge James Boasberg is expected to rule within the year on whether Meta engaged in illegal monopolistic practices through its acquisitions of Instagram and WhatsApp.

The case stems from Meta’s acquisition of Instagram for $1 billion in 2012 and WhatsApp for $19 billion in 2014. In December 2020, the FTC filed a lawsuit alleging that Meta maintained its monopoly in the personal social networking market through anti-competitive behavior and requested the divestiture of both platforms.

If the court rules in favor of the FTC, Meta may be ordered to divest Instagram and WhatsApp, or at least one of them, or adopt other remedies. However, even after the ruling, the case could extend for years. Analysts expect that a ruling in Meta’s favor would prompt an FTC appeal, while a ruling in favor of the FTC would initiate a new phase of litigation regarding the company’s restructuring.

During the trial, FTC attorneys questioned Meta executives, including CEO Mark Zuckerberg. As a central witness, Zuckerberg acknowledged he considered spinning off Instagram in 2018. An internal email from that year presented by the FTC showed Zuckerberg wrote that the chance of being forced to divest Instagram or WhatsApp within five to ten years was significant.

The main disagreement in the case lies in the definition of the “social networking market.” The FTC argues Meta dominates the “personal social networking services” market, while Meta maintains that it faces competition from short video platforms, e-commerce, and private messaging services.

Rebecca Allensworth, an antitrust expert and professor at Vanderbilt University, emphasized that the definition of market scope could be decisive, noting the FTC focuses on Meta’s unique role in connecting users with friends and family. Bloomberg Industry Research analyst Justin Teresi argued that Meta's claim of broader competition may strengthen its case, as the FTC may find it difficult to prove users choose Meta primarily for social sharing.

Allensworth suggested the FTC may have a strong case but was uncertain whether divestiture would result. Teresi estimated a 60% chance of Meta prevailing and noted a settlement remains possible before the final decision.

Jennifer Huddleston, senior fellow at the Cato Institute, warned that a ruling for the FTC could deter large-scale acquisitions in the U.S., as retroactive challenges to approved deals may hinder innovation and investment.

On May 27, Meta (Nasdaq: META) closed up 2.43% at $642.32 per share, with a market capitalization of $1.62 trillion.