This week saw an intriguing legal case enter the courtroom, as the Federal Trade Commission (FTC) filed a lawsuit against Meta (formerly known as Facebook) over allegations of anticompetitive behavior in the social networking market since 2020. Meta has consistently denied these allegations. The FTC suggests that Meta should separate the businesses of Instagram and WhatsApp, which are seen as driving market monopolization.
The investigation commenced yesterday in the District Court of Columbia, with FTC attorneys claiming that at the time, Meta (or Facebook) used acquisition strategies to buy Instagram and WhatsApp when both were small startups. This was aimed at stifling competition and preventing these companies from growing into significant competitors of Facebook, resulting in social service monopolization.
Meta’s attorneys dispute this claim, arguing that the FTC is attempting to define social networking as mere connecting tools for people, while Meta’s actions aimed at driving this monopolization. However, the truth is that connecting people is just one factor of social networking – it also serves as an entertainment tool and a platform for discovering new stories in the world. Companies still have to compete with other platforms like TikTok or YouTube. Furthermore, the FTC itself had previously approved the acquisitions of WhatsApp and Instagram, reversing this approval would have severe consequences.
Today’s hearing, with Meta CEO Mark Zuckerberg’s participation, presented data from both the FTC and Meta, along with interesting counterarguments:
Meta provided statistics showing an increase in app usage within the conglomerate following the ban on TikTok in the U.S., indicating that the app is not monopolizing and still competes with other platforms.
In an email from February 2012, Zuckerberg discussed Instagram, suggesting that they could build similar technology but might not catch up with trends, hence proposing to acquire the business for $500 million.
Zuckerberg also proposed acquiring Instagram without any changes to prevent user backlash while blocking potential competitors from arising.
The investigation is expected to continue throughout the week, with former Meta COO Sheryl Sandberg and Instagram co-founder Kevin Systrom expected to provide further insight.
Source: The New York Times
TLDR: FTC filed a lawsuit against Meta (formerly Facebook) over alleged anticompetitive practices in the social networking market. Meta denies the claims and argues against the FTC’s definitions of social networking, emphasizing the need for healthy competition in the industry.
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