The Federal Trade Commission (FTC) is resuming its antitrust attack on Meta. After first suing the tech giant in 2020, the Trump FTC now alleges that Meta violated the Sherman Antitrust Act by maintaining a personal social networking monopoly by purchasing Instagram and WhatsApp. But investing in software and attracting billions more users is a sign of competitiveness, not sclerosis.
Meta acquired Instagram in April 2012 for $1 billion in cash and Meta (then Facebook) shares and purchased WhatsApp for $19 billion in February 2014. The first Trump administration's lawsuit against Meta was dismissed in June 2021, after the U.S. District Court for the District of Columbia ruled the commission failed to show "that Facebook has monopoly power in the market for Personal Social Networking (PSN) Service." The FTC amended its complaint and the case was allowed to proceed to discovery.
The FTC accused Meta of acquiring Instagram "to neutralize a competitor," acquiring WhatsApp to "neutralize a competitive threat to its personal social networking monopoly," and leveraging network effects—an economic phenomenon where a product becomes more valuable as more people use it—to insulate itself from competition. While Instagram could rightly be seen as a genuine competitor of Facebook, its growth suggests that consumers derive more value from the platform now than they did before Meta's acquisition.
