Meta won its high-profile antitrust case against the Federal Trade Commission, which had accused the company of holding a monopoly in social networking.
In a memorandum opinion released Tuesday, Judge James Boasberg of the U.S. District Court in Washington, D.C., said the FTC failed to prove its argument. The case, initially filed by the FTC five years ago, centered on Meta’s acquisitions of Instagram and WhatsApp.
“Whether or not Meta enjoyed monopoly power in the past, though, the agency must show that it continues to hold such power now,” Boasberg said in the filing. “The Court’s verdict today determines that the FTC has not done so. A judgment so stating shall issue this day.”
Boasberg dismissed the case in 2021, saying the agency didn’t have enough evidence to prove “Facebook holds market power.” In August of that year, the FTC filed an amended complaint with more details about the company’s user numbers and metrics relative to competitors like Snapchat, the now-defunct Google+ social network and Myspace.
After reviewing the amendments, Boasberg in 2022 ruled that the case could proceed, saying the FTC had presented more details than before.
“We are deeply disappointed in this decision,” said Joe Simonson, the FTC’s director of public affairs. “The deck was always stacked against us with Judge Boasberg, who is currently facing articles of impeachment. We are reviewing all our options.”
Meta CEO Mark Zuckerberg, former operating chief Sheryl Sandberg, Instagram co-founder Kevin Systrom, and other current and former Meta executives all testified in the trial, which began in April.
The social media company’s shares were little changed Tuesday. The stock is up about 2% for the year, badly underperforming broader indexes and most of its megacap tech peers.
“The Court’s decision today recognizes that Meta faces fierce competition,” the company’s chief legal officer Jennifer Newstead said in a statement. “Our products are beneficial for people and businesses and exemplify American innovation and economic growth. We look forward to continuing to partner with the Administration and to invest in America.”
The ruling comes a little over two months after Google avoided the harshest possible penalty from an antitrust case it lost last year. While Google was found to hold an illegal monopoly in its core market of internet search, U.S. District Judge Amit Mehta decided the company would not be forced to sell its Chrome browser, bucking the Department of Justice’s request. Google was, however, ordered to loosen its hold on search data.
In the Meta case, the FTC claimed the company shouldn’t have been allowed to buy Instagram for $1 billion in 2012 and WhatsApp for $19 billion in 2014, and the agency called for those units to be divested. The commission also alleged that there were no major alternatives for apps like Facebook and Instagram that people use to communicate with friends and family in a online, social space.
However, a major challenge for the FTC, according to the judge, was in proving that Meta is breaking antitrust law today, not years ago when the primary use of social networks was very different and based on sharing other kinds of content.
“To win the permanent injunction that it seeks here, the FTC must prove a current or imminent legal violation,” he wrote.
Boasberg ultimately sided with Meta’s argument that the technology industry has evolved since the early days of Facebook, and the company now faces a wide variety of competitors like TikTok.
“While each of Meta’s empirical showings can be quibbled with, they all tell a consistent story: people treat TikTok and YouTube as substitutes for Facebook and Instagram, and the amount of competitive overlap is economically important,” Boasberg wrote. “Against that unmistakable pattern, the FTC offers no empirical evidence of substitution whatsoever.”
Big changes in social
Much of Boasberg’s conclusion was built on the transformation that’s taken place in the social media market in recent years and Meta’s changing position within it. User trends have moved heavily in the direction of video, where TikTok and YouTube have massive user bases and huge network effects.
“The most-used part of Meta’s apps is thus indistinguishable from the offerings on TikTok and YouTube,” Boasberg wrote.
Boasberg explained that there was enough evidence to show “that consumers are reallocating massive amounts of time from Meta’s apps” to those services and others, which has “forced Meta to invest gobs of cash to keep up.”
“Meta is not a monopolist insulated from competition,” he wrote. “The Court finds the evidence favoring Meta on this issue both credible and convincing.”
Boasberg also cited various documents and testimony from “industry insiders” that show how other tech companies like TikTok and YouTube viewed Meta as serious competition.
“TikTok and YouTube tracked Meta’s products as competitive threats,” Boasberg wrote.
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