A trial representing the most consequential challenge to Meta’s power online concluded on Tuesday, putting the future of the social networking giant into the hands of a federal judge.
The case — Federal Trade Commission v. Meta Platforms — wrapped up after six weeks of testimony from 38 witnesses at the U.S. District Court for the District of Columbia. They included Meta’s chief executive, Mark Zuckerberg, who was grilled by government lawyers accusing him of acquiring Instagram and WhatsApp in a “buy or bury” strategy to cement his company’s social networking monopoly.
Meta defended itself by saying that it faces plenty of competition from rivals, including TikTok and YouTube, and that it benefited the nascent apps with bountiful resources.
Now, both sides will have the chance to file follow-up briefings this summer. Judge James E. Boasberg, who is presiding over the case, said he would work “expeditiously” to issue an opinion on whether Meta broke the law. He is not expected to hold closing arguments.
Judge Boasberg will consider the government’s accusation that Meta, which was known as Facebook at the time, overpaid when it bought Instagram in 2012 for $1 billion and WhatsApp in 2014 for $19 billion to kill off its competitors. The government has argued that Meta violated Section 2 of the 135-year-old Sherman Antitrust Act, a federal law that prohibits the monopolization of an industry through anticompetitive practices.
The judge’s decision has the potential to reshape Meta’s powerful social networking business, which has helped define the social media landscape since Mr. Zuckerberg co-founded Facebook in his Harvard dorm room in 2004. The F.T.C. has pre-emptively asked the judge to force Meta to divest Instagram and WhatsApp, and if successful that request could fundamentally alter the power dynamics in Silicon Valley.
The centerpiece of the government’s case was a trove of more than 400 internal documents in which Mr. Zuckerberg and other executives discussed their anxiety over competition from Instagram and WhatsApp and their reasoning for buying them.
Judge Boasberg has said the key question he must answer is how to define social media networking, which has changed rapidly over the past decade as platforms have branched out into entertainment, gaming and commerce.
The F.T.C. has tried to define the market narrowly, saying Meta competes only with other apps that connect friends and family, mainly Snap’s Snapchat. Meta contends that users primarily visit Facebook and Instagram to scroll short-form videos for entertainment, making TikTok, YouTube and others rivals.
“This case presents a very important legal principle, which is that a firm that is a monopolist cannot acquire its most threatening competitors,” a senior F.T.C. official said in a press call last week. “Antitrust law requires competition on the merits, even in digital markets, and it’s competition on the merits that drives innovation and ultimately helps consumers.”
A Meta spokesman said in a statement that “the only thing the F.T.C. showed was the dynamic, hypercompetitive nature of the past, present and future of the technology industry.”
Judge Boasberg’s decision could have profound implications for the business world. If the F.T.C. prevails, it will send a message to businesses that they will face more scrutiny from regulators when acquiring start-ups.
“That could have a chilling effect on large players trying to acquire new talent or companies,” said Jennifer Huddleston, a senior fellow at the Cato Institute, a think tank.
Legal experts say the F.T.C.’s case will be hard to win because it seeks to unwind mergers from years ago, which regulators approved at the time. Meta called only eight witnesses over four days to bat down the government’s charges.
“Meta must feel confident in their arguments,” said Sruthi Thatchenkery, assistant professor of strategy at Vanderbilt University’s Owen Graduate School of Management. “It’s also very hard to unwind a merger.”
The case, filed five years ago, is part of a yearslong effort by government officials to rein in dominant technology companies. The Department of Justice has won two antitrust cases against Google and has sued Apple on claims that it illegally quashed competition in its app store. In addition, the F.T.C. is suing Amazon, accusing it of harming competition by giving its own products and services preference over third-party sellers on its platform.
Cecilia Kang reports on technology and regulatory policy for The Times from Washington. She has written about technology for over two decades.
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