High stakes for both sides in massive antitrust lawsuit.
US District Court Judge James Boasberg garnered national attention over his thwarted efforts to block President Donald Trump from deporting alleged Venezuelan gang members. Now Boasberg is presiding over an unprecedented antitrust action by the Federal Trade Commission (FTC) asserting that Facebook icon Mark Zuckerberg violated the law through his Meta empire. The lawsuit alleges that Meta’s acquisitions of Instagram in 2012 and Whatsapp in 2014 were used to create a gargantuan social media entity that rose to the level of an illegal monopoly.
What the Suit Is About
As the trial opened on Monday (April 14) in Washington, DC, the spotlight was on Zuckerberg, whose rise to wealth and fame coincided with the Facebook brand. Government agencies have grown alarmed that social media platforms pose mental health risks for users, can distort or regulate content, and can influence political elections by manipulating large-scale personal data collection. The intensifying controversy surrounding China’s potential abuses through its TikTok platform, along with revelations that Zuckerberg made earnest efforts to expand his company’s reach into China, have further heightened the stakes of the trial.
Judge Boasberg previously dismissed the FTC complaint for shortcomings in its definition of how a social networking platform works and how the government calculated its claims that Facebook controls more than 60% of that market. The refiled complaint assuaged the judge’s concerns sufficiently, and the trial has begun.
Alarms that Zuckerberg has sought favor from President Trump to thwart the FTC’s effort to break up his empire and force a sell-off of Instagram and/or WhatsApp also appear speculative or specious. Donald Trump sued Meta for suspending his Facebook and Instagram accounts, for which the company recently paid $25 million in settlement. For its part, Facebook has tried to claim that the federal government cannot reasonably complain about the massive organization after approving the acquisitions. But Barack Obama-appointed Boasberg dismissed that argument in his previous ruling, concluding that legal precedent regarding Section 7 of the Clayton Act suggests the FTC can proceed under Section 2 of the Sherman Act:
“Facebook argues that because those acquisitions happened all the way back in 2012 and 2014, respectively, Plaintiff’s challenges do not contend that the company ‘is violating’ or ‘is about to violate’ [Section 2 of the Sherman Act].
“While Facebook’s argument has some intuitive appeal, it runs into contrary precedent … The rule under Section 7 is thus that so long as an acquiring company continues to hold acquired assets, the Government may ‘at any time’ argue that such company is violating Section 7.
“Because the FTC’s challenges to Facebook’s acquisitions here arise under Section 2 of the Sherman Act, not Section 7 of the Clayton Act, the question becomes whether that same principle applies to claims brought under Section 2. The Court sees no reason why not, nor does Facebook offer one.”
Zuckerberg on the Stand
The government has alleged that Facebook has employed its dominance to block other social media platforms from access to the market. Boasberg’s opinion notes that antitrust law does not generally prohibit monopolist actors from such actions under the “no-duty-to-deal-rule” but allowed that the government might prevail under the “narrow-eyed needle” of an exception. The judge was skeptical, however, ruling that “Facebook’s general policy of withholding API [Application Programming Interface] access from competitors … was plainly lawful to the extent it covered rivals with which it had no previous, voluntary course of dealing.”
The Meta landscape shifted following the acquisitions, as WhatsApp co-founders Brian Acton and Jan Koum left the company, followed by Instagram co-founders Kevin Systrom and Mike Krieger. In testimony on Monday, Zuckerberg contested FTC claims he sought unfair advantage by explaining that the business model of the company has morphed along with user interest over the last decade in unanticipated ways, shifting from a “friend and family” focus (Facebook’s strength) to advertising and interactions that more directly supply users, stating, “The ‘friend’ part has gone down quite a bit but it’s still something we care about.”
Additional witnesses targeted by the FTC include former Meta executives Adam Mosseri and Sheryl Sandberg. Sandberg was recently sanctioned by a Delaware court for intentionally deleting emails related to the Cambridge Analytica privacy scandal, in which Facebook allegedly sold confidential user information of up to 87 million people to assist the 2016 presidential campaigns of Ted Cruz and Donald Trump.
Facebook Emails
A great deal of the FTC complaint rests on emails, especially those of Zuckerberg. In one exchange, FTC attorney Daniel Matheson queried the Facebook creator about internal emails from 2011, 2012, and 2022. Matheson characterized one 2022 email as “discussing strategies that Meta might employ to ensure there’s a vision for Facebook in light of concern for cultural relevance,” to which Zuckerberg conceded, “That’s generally a good summary.”
To overcome Judge Boasberg’s frank skepticism, the FTC has a long way to go to prove Facebook has violated antitrust laws. The temporary shutdown of the social media platform TikTok caused a spike in Facebook traffic, which Meta attorneys argued demonstrates healthy market competition. The interplay between the various platforms and the nature and amount of advertising revenue also makes murky legal waters cloudier – and the burden of proof is on the government. As to those who claim Trump will impact the trial, Judge Boasberg is an unlikley ally.
The government seeks to compel Facebook to dismantle its previously approved acquisitions of Instagram and WhatsApp, which would cost not only Zuckerberg but also stockholders billions of dollars in revenue. In the ongoing bench trial (meaning there is no jury, and the court rules on both findings of fact and issues of law), the government faces a tough row to hoe. Zuckerberg is entitled to make billions of dollars, and the government has an uphill hike to show that, whatever his intentions were a decade ago, the current operation of the merged Meta entity is causing impermissible ongoing harms to competitors in violation of US antitrust laws.
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