Todd Feathers
Meta will become the latest major tech company to face a full antitrust trial after a federal judge on Wednesday denied the company’s motion to dismiss a complaint brought by the Federal Trade Commission regarding the acquisitions of WhatsApp and Instagram, according to Reuters.
The FTC originally filed the complaint against Facebook, which is now under Meta’s corporate umbrella, in 2020. Since then, the tech giant and the agency have been slugging it out in federal court to determine whether the lawsuit can move forward.
Reuters reported on Wednesday that Judge James Boasberg decided the FTC can proceed to trial with its allegations that Facebook paid above market price for WhatsApp and Instagram in order to stymie potential competitors. However, the agency will not be able to argue that Facebook engaged in further anti-competitive practices by prohibiting app developers from accessing its platform unless they agreed not to compete with Facebook’s core services.
Facebook purchased Instagram in 2012 for $1 billion at a time when the then-independent company was emerging as a potential competitor. In multiple emails quoted throughout the FTC’s original complaint, Facebook CEO Mark Zuckerberg appeared unconcerned about the potential cost of the acquisition but significantly worried about what might happen if Instagram were allowed to grow on its own.
“I wonder if we should consider buying Instagram even if it costs $500 [million] … one concerning trend is that a huge number of people are using Instagram every day … and they’re only uploading some of their photos to [Facebook]. This creates a huge hole for us,” Zuckerberg wrote.
In a 2008 email, he wrote that “it is better to buy than compete.”
Several years later, in 2014, Facebook bought the messaging service WhatsApp for $19 billion. The FTC alleges that company executives saw WhatsApp as the biggest potential threat to Facebook’s dominance in the mobile app market and wanted to not only neutralize one competitor but also dissuade other potential challengers in the messaging space.
In its motion to dismiss the FTC’s complaint, Meta argued that it faced “fierce competition” from other platforms like TikTok, X, YouTube, and Snapchat and that its acquisition of Instagram and WhatsApp “has provided countless benefits for consumers.”
Reuters reported that Boasberg’s ruling will curtail Meta’s ability to make some of those claims at trial. The company will not be allowed to argue that the WhatsApp acquisition boosted competition for consumers by strengthening Facebook in relation to Apple and Google.
The court has not yet set a date for the trial to begin.