Meta Platforms Inc., formerly known as Facebook, is facing serious allegations from the U.S. Federal Trade Commission (FTC) for withholding crucial information during the regulatory reviews of its Instagram and WhatsApp acquisitions. These acquisitions, finalized in 2012 and 2014 respectively, have come under renewed scrutiny as part of a lawsuit aimed at breaking up the social media giant.
Background of the Acquisitions
In 2012, Meta acquired Instagram, a popular photo-sharing app, and two years later, it purchased WhatsApp, a leading messaging platform. At the time, the FTC conducted a thorough review of the Instagram deal and a simpler 30-day review for WhatsApp. Despite this scrutiny, the acquisitions were approved, a decision that has since been heavily criticized.
FTC’s Current Allegations
The FTC filed a lawsuit against Meta in 2020, accusing the company of monopolizing the personal social networking market by acquiring emerging rivals. The latest court filing reveals that Meta withheld key information from regulators during the original reviews. The FTC contends that Meta provided only limited data and has since uncovered substantial additional evidence, including pre-acquisition documents not shared in 2012 and 2014.
According to the FTC, Meta requested a limited review of the deals, resulting in the agency’s failure to access the full scope of information available. The FTC now argues that with more evidence at hand, it’s clear that Meta’s actions stifled competition and innovation in the social networking space.
Meta’s Defense
Meta has vehemently denied the FTC’s allegations, arguing that the agency has not presented sufficient evidence to support its claims. Chris Sgro, a spokesperson for Meta, stated that the evidence demonstrates fierce competition faced by Meta and highlighted the company’s significant investments in Instagram and WhatsApp, which have greatly benefited consumers by offering free, high-quality services.
Sgro emphasized that while the FTC has made little progress in building its case over the past four years, Meta has continued to invest billions in enhancing its products. Instagram alone generated $16.5 billion in revenue in the first half of 2022, accounting for nearly 30 percent of Meta’s overall income, showcasing its pivotal role in the company’s success.
Previous Allegations and Regulatory Fines
This isn’t the first time Meta has been accused of withholding information. In 2017, European antitrust regulators fined Meta 110 million euros ($122.1 million) for providing misleading information about the WhatsApp acquisition. The current FTC filing also accuses Meta of increasing the ad load on Instagram and Facebook, degrading the user experience for those most reliant on these platforms. Additionally, the FTC alleges that Meta has “chronically deprived Instagram of resources to innovate and improve features.”
The Road Ahead
US District Judge James Boasberg, who is overseeing the lawsuit, has not yet indicated when he will rule on Meta’s request to dismiss the case or set a trial date. The case, titled “US Federal Trade Commission v. Facebook Inc., 20-3590, US District Court for the District of Columbia,” remains a critical battleground for both Meta and the FTC.
Conclusion
As the legal battle unfolds, the FTC’s allegations against Meta underscore the complexities and challenges of regulating tech giants in an ever-evolving digital landscape. The outcome of this case could have far-reaching implications for the future of antitrust enforcement and the structure of the social networking industry. Whether Meta will be able to successfully defend its acquisitions or face potential divestitures remains to be seen.
