Meta Faces Antitrust Trial Over Instagram, WhatsApp Acquisitions

Meta is facing a federal antitrust lawsuit this week over its acquisitions of Instagram and WhatsApp. The Federal Trade Commission (FTC) seeks to force the company to divest the platforms, alleging that the purchases were part of a deliberate strategy to eliminate competition in the social networking market.

“This is a critical test case for whether the antitrust laws can be used to unwind mergers designed to eliminate upstart competition,” says Gene Kimmelman, former Senior Official of the Antitrust Division, US Department of Justice, to the New York Times.

The lawsuit, Federal Trade Commission v. Meta Platforms, marks a significant expansion of antitrust enforcement by attempting to apply the concept of a "buy or bury" strategy, where dominant firms acquire emerging competitors to neutralize future threats. The FTC argues that Meta’s acquisitions of Instagram in 2012 and WhatsApp in 2014 were executed to maintain its monopoly in social networking. Regulators now aim to reverse those deals, which were originally approved by the government.

Meta, formerly Facebook Inc., acquired Instagram for US$1 billion and WhatsApp for US$19 billion. At the time, Instagram had around 30 million users and 13 employees, while WhatsApp had 450 million users and 50 employees. Both platforms have since experienced significant growth, surpassing Facebook itself in user engagement and expansion rates. According to the FTC, internal communications from Mark Zuckerberg, CEO, Meta, — including a 2008 email stating “It is better to buy than compete” and a 2012 memo about the strategic intent to “neutralize a potential competitor” — serve as evidence of anticompetitive conduct, reports the New York Times.

Meta has denied the allegations and maintains that the acquisitions fostered innovation and consumer benefit. The company argues that it faces strong competition from platforms such as TikTok, Snap, Reddit, and LinkedIn. Meta argues that the FTC’s retroactive challenge undermines the legitimacy of deals that were legally approved more than a decade ago.

“We are confident that the evidence at trial will show that the acquisitions of Instagram and WhatsApp have been good for competition and consumers,” says Chris Sgro, Spokesperson, Meta. “The commission is wrongly continuing to assert that no deal is ever truly final, and businesses can be punished for innovating.”

This trial is among a broader series of antitrust actions targeting major technology firms. The Department of Justice (DOJ) has filed and won cases against Google for monopolistic practices in internet search and digital advertising. It has also brought suit against Apple over alleged anti-competitive restrictions within its software ecosystem and against Amazon for monopolistic behavior in e-commerce. The FTC’s actions against Meta are part of the most aggressive federal antitrust campaign since the early 20th century.

The case has bipartisan backing. The proceedings began under the first Donald Trump administration, and the case was refiled in January 2022 under FTC Chair Lina Khan. Leadership of the FTC has since transitioned to Andrew Ferguson, appointed during Trump’s second term. Ferguson has publicly supported continued scrutiny of concentrated market power in the tech sector and has criticized Meta for content censorship.

The trial's outcome may establish legal precedent for the application of Section 2 of the Sherman Antitrust Act of 1890, which prohibits maintaining monopolies through anticompetitive means. The FTC must demonstrate that Meta’s dominant position in social networking resulted directly from the Instagram and WhatsApp acquisitions — and that in the absence of those deals, competition in the market would have remained viable or grown independently.

Legal analysts say that the FTC faces significant challenges in meeting the evidentiary burden, reports The Verge. The argument relies on proving that Meta would not have retained its dominance without acquiring Instagram and WhatsApp. This kind of counterfactual claim is difficult to substantiate due to the multitude of variables influencing market dynamics over the past decade. 

In 2021, Judge Boasberg initially dismissed the FTC’s case, citing insufficient definitions of the relevant social networking market and the nature of Meta’s alleged monopoly. A revised complaint was accepted later that year, though the judge cautioned that the agency's claims "strain this country’s creaking antitrust precedents to their limits."

CNN reports that the case is expected to last several weeks and will include approximately seven hours of testimony from Zuckerberg. Additional witnesses include Sheryl Sandberg, former COO, Meta, and the original founders of Instagram (Kevin Systrom and Mike Krieger) and WhatsApp (Jan Koum). 

If the court rules in favor of the FTC, Meta could be required to separate Instagram and WhatsApp into independent entities, a move complicated by years of technical and data integration, reports the BBC. A decision of this magnitude would have widespread implications for future tech mergers and acquisitions, potentially deterring similar consolidation strategies across Silicon Valley. For startups, it may signal reduced likelihood of acquisition exits, a key consideration in venture capital funding models.

The decision will also be closely monitored internationally, as regulatory bodies in the European Union and other jurisdictions weigh similar antitrust initiatives. For the broader digital economy, the trial represents a turning point in the enforcement of competition law in the platform era, particularly regarding post-approval merger challenges and the regulation of market power accumulated through strategic acquisitions.