Zuckerberg tells court Meta faces broader competition than FTC says

Meta CEO Mark Zuckerberg argued in federal court Monday that his company competes against a broad array of online competitors, rejecting the Federal Trade Commission’s claim that the social media giant maintains a monopoly among a small group of communication apps that connect people to friends and family.

FTC lawyer Daniel Matheson sought to use Zuckerberg’s previous comments and company documents to show that Facebook prioritized helping users connect with people they knew. For instance, Matheson cited the company’s registration documents with the Securities and Exchange Commission, where it states “people use Facebook to stay connected.”

But the social media CEO argued that the company’s broader goal is to enable its users to learn about the world and consume content posted from others outside their personal networks.

“The vast majority of the experience is more around exploring your interests, entertainment, things like that,” Zuckerberg said. “That’s kind of just been the trend the whole history of the company.”

Zuckerberg also argued that the company often received different signals about what users wanted from Facebook, with users reporting that they wanted to see more content from people they knew but also often interact with posts from influencers they don’t personally know.

The FTC was pressing its case before the U.S. District Court for the District of Columbia that Meta has an illegal monopoly in the “personal social networking market,” which Meta argued is a mischaracterization of its market and that it competes in a much broader internet ecosystem that includes TikTok, YouTube and X.

The FTC first sued Meta, the parent company of Facebook, in 2020, arguing that it illegally acquired WhatsApp and Instagram as part of a larger strategy to buy and crush up-and-coming rivals. The agency contended the social media giant’s acquisitions caused the company to invest less in making Facebook a better product, while depriving users of more vibrant social media app options.

“They decided that competition was too hard and it would be easier to buy out their rivals rather than compete with them,” Matheson told the courtroom Monday in his opening remarks.

The FTC’s lawsuit is the latest effort by antitrust regulators to rein in the power of dominant Silicon Valley firms. For years, critics of Big Tech have argued that major internet platforms have become monopolies, stifling competition and consumer choice. Even Republicans, who are traditionally known for a pro-business agenda, have criticized Meta and other companies over the control they wield over speech online.

The stakes of the case against Meta are high. If U.S. District Judge James E. Boasberg sides with the FTC, Meta could be forced to divest itself of Instagram and WhatsApp, which it bought in 2012 and 2014, respectively, and which have bolstered the company’s advertising business and reach abroad. This year, Instagram is expected to represent slightly more than half of the company’s revenue from the American market, according to analytics firm eMarketer.

Meta lawyer Mark Hansen argued during his opening arguments Monday that the company faces robust competition from a wide variety of technology companies, citing the fact that Meta was forced to introduce its short-form video product known as Instagram Reels in light of the growing popularity of the video-sharing app TikTok.

“I can’t tell the difference,” Hansen said while flashing similar-looking photos of the companies’ two services on a screen. Yet, he added, “the FTC’s entire case turns on” the idea that “Instagram doesn’t compete with TikTok.”

Matheson argued that while people may use Meta’s services for other purposes, such as entertainment, the question the court should consider is whether Meta has reasonable alternatives for its primary purpose, which is facilitating sharing between friends and family.

The government also says top Meta executives saw Instagram and WhatsApp as threats to their business. It bolstered its case with internal correspondence from Zuckerberg and others showing their concern about those apps’ popularity when the company was struggling to adjust to the mobile app age.

Under questioning from Matheson, Zuckerberg acknowledged that the company realized as early as 2010 that it made a mistake when it didn’t specifically tailor Facebook’s code to the mobile operating systems of Apple and Android, relying on a broader technical approach.

Zuckerberg was also confronted with 2011 communications he sent to other employees in which he complained about the company’s faltering efforts to build a stand-alone photo app, code-named Snap, citing the need to be able to better compete with Instagram.

When asked by Matheson whether he was interested in buying Instagram because it had better camera functionality than Facebook and its users were sharing photos among each other, Zuckerberg said yes.

“It was a valuable service for sharing photos,” Zuckerberg said.

During his opening remarks, Matheson cited an internal message from Zuckerberg in which he recognized that by buying other tech platforms, “what we’re really buying is time” to integrate their services into the company before a new competitor “can get close to their scale again.”

“We could call this a smoking gun, but even if we didn’t have it,” Matheson said, the FTC has other evidence.

The FTC’s case uses a relatively novel strategy to argue that consumers have been harmed by what it considers to be Meta’s anticompetitive practices, rather than the strategy the government has typically used in antitrust cases, which often look at whether prices have gone up as result of a merger.

Matheson argued that because users didn’t have many other options, they still used Facebook when consumer satisfaction declined after the Cambridge Analytica scandal when a political consulting firm improperly obtained the personal information of millions of users. He added that in addition to privacy lapses, Facebook showed users more ads on its products— something he said it might not have done if it had more competition.

Hansen said those factors were inadequate measures of harm, and the company invested a lot of resources to improve those apps. “What price did Meta charge before it became a supposed monopoly?” Hansen asked. “It was zero, and it stayed that way until today.”

Slade Bond, who led a congressional inquiry into Meta and other tech giants as chief counsel to the House antitrust subcommittee beginning in 2019, said the trial will test the capacity of existing laws to address modern monopoly power.

Meta’s defense relies on “antiquated precedents around what an antitrust market is,” said Bond, who now leads public policy at the law firm Cuneo Gilbert & LaDuca. “We need these courts to pull antitrust into the 21st century.”

The trial is expected to include testimony from high-profile current and past Meta executives, including former chief operating officer Sheryl Sandberg.

The FTC’s initial lawsuit against Meta, filed under President Donald Trump in 2020, was dismissed in June 2021. Boasberg ruled the government had failed to show enough evidence to prove Facebook held a monopoly over the “personal social networking” market.

The FTC refiled its suit in August 2021, and Boasberg allowed it to move forward, finding that the government had strengthened its case with more evidence. In November, Boasberg denied Meta’s motion for summary judgment, saying the parties’ arguments so far leave “no clear victor” and the case “must go to trial.”

The FTC is pursuing this case at a time when the tech sector has been seeking to align itself with the Trump administration in hopes of securing a better regulatory environment. Most recently, Zuckerberg traveled to the White House to lobby the administration to get the FTC to resolve the lawsuit, The Washington Post and other outlets have reported.