The U.S. vs Meta
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All right, let's talk more about that Facebook deal to buy Instagram. Instagram, for those of you who may not know, is a photo sharing app, kind of a postcard type situation. Back in 2012, Facebook, now called Meta, bought Instagram for approximately $1 billion. It was not that much of a surprise because Facebook was struggling. Paresh Davey is a senior writer at Wired.

They were trying to create sort of photo sharing tools. They were trying to enter the mobile era. But at the time, there was a lot of buzz about Instagram. They had just raised, I think, half a billion dollars or something crazy like that. And all of a sudden, a couple of days later, Facebook meta scooped them up. Then two years later, Zuckerberg made another purchase, this time WhatsApp, for approximately $19 billion.

It was an era where people were talking about WeChat and like how that was the Chinese super app where you could do everything. And so it was kind of, you know, a natural continuation of that, that Facebook would want to try to compete in that space and have WhatsApp become a super app and not just a social media app or a chat app.

Did anyone at the time think that this shouldn't be happening, that Facebook shouldn't be buying up Instagram and then WhatsApp? Did anybody have a problem with this? I don't think there was as much of a tide of anti-big tech sentiment because it wasn't, you know, considered a big tech at that point. It took a few more years.

So at the time, it was just par for the course for Silicon Valley for these big companies to scoop up smaller startups from time to time. Apple, you know, was really known for it back then. Google, you know, was only a few years off of buying YouTube. It was totally normal. It was seen as the way these tech companies grow. These were a new era of tech companies, but you go back to like the older era of tech companies like an Oracle or an HP. This was

It's totally normal to see something like this happen. Thinking about those two purchases within the span of a couple of years, did that shake up the social media scene? I guess it's hard to say. I mean, that's sort of what we're debating now.

We're debating it now because Mark Zuckerberg and his company Meta are trying to convince a judge that those two purchases from over a decade ago, both Instagram and WhatsApp, were legal. This week, the FTC and Meta began a trial to determine if Meta's purchases violated antitrust law.

Now, the government says Meta created an illegal social media monopoly when it bought the two companies. And the outcome of the trial could have far-reaching consequences. It's huge. Facebook could be forced to sell off Instagram and WhatsApp. Think about Instagram being over 50% of Meta's advertising revenue in the U.S. Losing all of that, it's a big deal.

Today on the show, Meta goes to court in a landmark antitrust case that could upend the tech industry. I'm Shaina Roth, filling in for Lizzie O'Leary. You're listening to What Next TBD, a show about technology, power, and how the future will be determined. Stick around. Calling all explorers, road trippers and hikers, bird watchers and mountain bikers, and have-to-get outsiders. We need your help.

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This case started in 2020. The FTC alleges Meta, formerly known as Facebook, engaged in anti-competitive practices by swallowing up new competitors to their business, specifically Instagram and WhatsApp. The argument from the FTC is that these two acquisitions, WhatsApp, Instagram, enabled Meta

meta to illegally maintain a monopoly, that these acquisitions were aimed at taking out competition, bolstering Facebook, taking out these things that were nipping at the heels of Facebook and allowing Facebook to continue to thrive in now a newly constrained market. And the FTC's argument is that violates U.S. antitrust law.

The case has been moving slowly through the court system. That's for a few reasons. One is just that this is kind of how these things are. Another is that initially, the judge in this case didn't buy the arguments the FTC was making. The FTC had to refile their case. The narrowing of the lawsuit took a bit of time. And Meta, of course, fought back when they could. That gets us to the trial now.

Here's where my brain runs into an obstacle course. It's how the FTC is trying to differentiate the way meta social media platforms work versus others. Can you walk us through what they're saying there? I mean, is it more about connecting with people as opposed to videos like you would on YouTube? Because the FTC is basically saying that, you know, they've taken over this particular space.

The FCC is arguing that Facebook operates in this world known as personal social networking services and that Facebook's competitors, this is Facebook, you know, the blue app, not Meta overall as a company, but, you know, Facebook, the old social network from the Harvard days two decades ago, that its competitors today are effectively Snapchat and this thing called MeWe that not a lot of people have heard about.

And that TikTok...

which we all probably view as a huge competitor for Facebook, is not a competitor of Facebook. Neither is YouTube. Neither is Twitter slash X. That all those things are more about following creators, not about following family and friends. And the FTC says that Facebook, in Mark Zuckerberg's own words, you know, when he founded Facebook, where Facebook was meant to connect with family and friends. And that justifies this sort of

very narrow market. And that it's significant because when you consider just Snapchat and MeWe as competitors to Facebook, Facebook has a 80% plus market share. But when you throw in TikTok, when you throw in YouTube, Facebook's market share falls way, way, way down and they don't look like a monopoly anymore.

Is this a stretch? I mean, are there actual differences here? Because it feels like when I think of social media and I think of all these different platforms, TikTok, Instagram, Facebook, all of them, they're doing the same things, maybe just to varying degrees. That's what the judge has to reckon with. I mean, evidence has started to come out at trial this week. And I think part of the FTC's argument is that

Over time, yes, Facebook shifted. It became more video heavy. It became a little bit more like TikTok. It became a little bit more like YouTube, these other things that are not Snapchat and MeWe. But

That it did so maybe less because of competitive pressure and because, you know, they just made sort of decisions along the way to pull back from family and friends kind of sharing. And it was Facebook's own undoing. Like, it was their own unraveling. They made their product worse. And that rather than improving the product and really competing, Facebook was able to get away with, like,

like pounding us with more ads, pounding us with less of what we wanted. And that was totally okay. And that sort of degrading in quality could be an example of a harm to consumers from Facebook's anti-competitive behavior.

So let's talk a little bit about Mark Zuckerberg, the CEO of Meta. He took the witness stand earlier this week, and he's had a lot of his own words, I think particularly some emails from back in 2012, being really used against him. What stood out to you about his testimony? Oh.

I would say that he's trying to defend and reframe all these things he said back then about trying to neutralize the competition or bury the competition, that buying is better than competing.

All of those things probably, you know, not great for him in the eyes of the judge who is presiding over this trial. There's no jury. It's rough stuff to try and walk back. Yeah, but at the same time, Meta's argument is that these things that Mark said back then don't matter. What matters is whether Facebook, you know, was a monopoly back then. Is Facebook a monopoly now? And if...

if you can't establish Facebook was a monopoly, you know, throughout this period, you know, there's no case here. Yeah, it's such an interesting court case in that way because the FTC is trying to argue that,

intent matters, whereas Meta, it seems, is trying to argue that only the outcome matters, which I feel like is something that we don't see very often in court cases. Exactly. Like, has the market gotten worse? Are consumers worse off? Are advertisers worse off? Is there something that we are lacking in the social networking world that we would have had Facebook not bought Instagram and WhatsApp? I mean,

I mean, it's hard to say in some ways, but the FTC is saying, yeah, you can look at it. Like there's too many ads on Facebook. And that is a direct line to these acquisitions.

Last year, we saw Google lose a case over ad practice, and now we're awaiting what punishment Google might face. What would a victory or a loss for Meta look like in this case that's being argued right now? Yeah, the Google one was over Google search and search advertising monopoly. Here, a loss for Meta basically means that there would be a second trial at some point in the future where the same judge would decide what the penalties are.

Should that divestment, should Meta be forced to sell off, separate in some form or fashion, Instagram and WhatsApp into independent companies? Should there be some kind of restrictions on doing similar deals in the future? Maybe the FTC has to do a thorough review of every Meta acquisition in the future, even the tiniest, tiniest ones. There could be a whole host of conditions.

The expectation is that the judge will sort of look to that Google case because the penalties trial in the Google case is about to begin. So, you know, if Meta loses, by the time that happens, the judge in the Meta case will have the Google case to look to as an exemplar of what to do in this kind of situation. Speaking of that Google case, on Thursday, a federal judge ruled that Google had acted illegally to maintain a monopoly in some of the online advertising industry.

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See terms at discover.com slash credit card. This lawsuit was filed way back in 2020, which, for those keeping track, was during Donald Trump's first administration. In terms of Trump's relationship to Mark Zuckerberg, it was a very different time. Do you

During the first Trump administration, I mean, President Trump had a ton of hostility towards Facebook, right? He argued that there was conservative bias there, that there was meddling in the election, that Mark Zuckerberg was funding these initiatives related to, like, election and voter turnout and election technology, and that Facebook was just messing with things, that it was way worse than 2016 when, you know,

One might argue that Facebook helped Donald Trump win the election in some way. And 2020 was the exact opposite. But there was also this general big tech anti-sentiment in Trump's first term that sort of led to this lawsuit. Where the relationship really changed was January 6, 2021, the Capitol insurrection. After that, Facebook banned Donald Trump's account. And that's where things got really tense.

Yeah, let's talk more about that, because there has been a big shift between the Zuckerberg and Trump relationship in Trump 1.0 versus now Trump 2.0. What has Zuckerberg been doing to get closer to Trump?

We've seen a few things. Mark Zuckerberg and sort of Facebook meta settled this lawsuit that Trump had filed about his account being banned. And part of the settlement was a donation to President Trump's presidential library fund. We saw meta donate to Trump's inauguration fund, which they hadn't done the previous time. We've also seen that Facebook, Instagram have relaxed some of their policies around

around content moderation in ways that you could argue Republicans support.

So there's been this effort to really come out and say, like, you know, maybe we don't endorse President Trump, but we are supportive of where things are headed. We are going to not challenge his his policies. We're not going to say, you know, we are going to keep our DEI policy and sue you to keep it. Like, there's a lot of things that maybe Mark Zuckerberg of 2017 would be expected to do that are not happening now. And instead, the very opposite are happening.

What I found interesting was that the New York Times reported that Mark Zuckerberg had been lobbying Trump to resolve the antitrust case. And it seems to fit into this broader political sphere where tech guys are trying to get in with Trump. In general, I mean, if Meta loses, what was the point of Zuckerberg trying to cozy up with the Trump administration?

Like I said, the consequences are huge, right? Losing Instagram, losing WhatsApp. WhatsApp doesn't have a ton of revenue just yet, but investors are very excited about the prospects. It's key to Meta's future. Losing those two things is huge. So it makes total sense that Mark Zuckerberg would lay out all the stops to try to prevent this. And if that means cozying up to Trump, I guess that makes good business sense for them.

But I think it's also important to say that a lot of people...

people in the FTC circles, former officials, former commissioners, you know, they say it's totally inappropriate for Meta, for Mark Zuckerberg to have been trying to get the president to intervene here, that the FTC is meant to be an independent agency, generally with three commissioners of one party, two of another. Right now, there's just three Republican commissioners and, you know, wholly inappropriate for them to have tried to intervene here.

So in February, the FTC launched an inquiry into what they call tech censorship. And Republicans have long complained about censorship on social media platforms. And at the same time, they classically have also been against government intervention in business. Is all of this just a sort of like manifestation of everything?

everyone disliking big tech, but they only have one legal lever to pull to try and get back at Meta? I think there's something to that. Trump at this point might appreciate Mark Zuckerberg. He might appreciate Meta and what they've quote unquote done for him. At the end of the day, though,

If the FTC's argument is to, you know, be believed, Facebook did something wrong. It did something illegal. And Trump might believe it's worthwhile to have the company punished for its past misdeeds that, you know, those shouldn't be overlooked. Something illegal was done. There should be a penalty for that, regardless of, you know, how things look today.

An interesting little wrinkle in all of this is that the judge in the case is James Boasberg, who was recently overseeing some of Trump's El Salvador deportation cases. How do you think the Trump administration's behavior in Boasberg's courtroom over the last few weeks and months will influence how this case plays out?

I would have to believe that he views the FTC as a separate entity from, you know, Trump's Department of Homeland Security or Trump's Department of Justice. He seems to be having his own thoughts about that case. I mean, another wrinkle here is that he has admitted that he barely uses Facebook. He

And earlier this month, they had to have a whole like tech tutorial, I guess is what it's called in court parlance, where an FTC folks and then meta folks like walked him through like how Facebook works and how the technology at play in the cases. But I think the other stuff happening with with immigrants and, you know, those cases, I think he can separate what's going on there versus here.

How are other social media companies feeling about this case? I'm guessing they're watching it extremely closely. What are they worried about? Imagine the government coming to you 15, 20 years later and saying this acquisition that you did, we want it undone. We don't believe you should have been allowed to buy this company and we need you to sell it. Imagine that happened maybe for political grounds. You know, a future president,

who's unhappy with a particular tech company or a social media company and just wants to force a sale because they're unhappy. And, you know, it's sort of like political expediency. I think that's concerning to a lot of companies. It is hard to plan, hard to sort of see into the future when someone is coming at you way down the road and trying to get you to sell off a

vast part of your business. This is how Silicon Valley has always worked by doing these acquisitions. So it's a huge challenge for venture capitalists, for the investment community, if they are unable to sell to the big tech companies because the big tech companies are so skittish about doing these deals because it could be unwounded any time.

How long do we expect this case to go on for? About 40 days, but in not perfect continuation, so in chunks. So it may not wrap up until right before the July 4th holiday. In your piece, you said it was hard to predict who was going to win this case, but some experts view the FTC as a bit of an underdog. Now that the trial is underway, do you have a prediction?

I do not have a prediction. It's still way too early. We've just had a couple of days of testimony. Yes, most of the testimony, all the testimony so far has been from Mark Zuckerberg. And he is, quote unquote, the star witness in the eyes of many observers. The FTC has, we said, still

still has a long way to go in trying to lay the foundation here to show that there is actual harm. They have a long road ahead. Paresh Dave, thank you so much for coming on the show and lending us your expertise. I appreciate it. A wonderful way to spend my day.

Paresh Davey covers tech for Wired. And that is it for our show today. What Next TBD is produced by Patrick Fort. Our show is edited by Evan Campbell. Slate is run by Hilary Fry. TBD is part of the larger What Next family. And if you're looking for even more Slate podcasts to listen to, check out Wednesday's What Next, which is all about how the Trump administration is trying to make an example out of

Maine, looking for ways to punish the state because the governor told Trump no. We'll be back on Sunday with another episode about how technology has and hasn't changed how we raise our kids. I'm Shaina Roth, in for Lizzie O'Leary. Thanks for listening.