Mike Dubuski, who is ABC News Technology reporter, is with us. Mike, First of all, thank you for being with us as you do occasionally. Hey, let's get into this thing and talk about why, what, and what the outcomes may be.
Yeah, so let's start with the what. This is a case that sees its origin all the way back in twenty twenty. We've been talking about this question of whether Facebook now Meta is a monopoly in the world of social media for about five years now. This started under the first Trump administration. The case was transferred over to the FTC under the Biden administration, and now it is finally going to trial after some filings and some refilings, and it has been a long process, but now we
are finally seeing representatives from Meta. Mark Zuckerberg is testifying today. He also testified yesterday, and from the FTC from the federal government appearing in court arguing over some key questions. Mainly this goes back to the acquisition of Instagram in twenty twelve and the acquisition of WhatsApp in twenty fourteen. This was before the company was called Meta, it was
called Facebook back then. It the government is alleging here that those acquisitions were made not because Facebook was trying to innovate technologically. They weren't trying to become more competitive. Rather, they were trying to squash out the competition. And this, the FDC says, is a violation of the eighteen ninety
Sherman Antitrust Act. Now, Bill, I know that you're very familiar with the eighteen ninety Sherman Anti Trust Act, but for just listeners who are not, it states that it is illegal to maintain a monopoly by using anti competitive practices, and those practices in this case amount to buying up worthy competitors in the marketplace basically just to take them off the playing field.
Okay, so one quick question. The argument's going to be they did it to create a monopoly. The defense, if I'm a defense attorney representing Meta, I'm going to say, hey, I bought this or he bought this just as a business investment because we figured this was going to make buckets of money, which, of course it turned out. I mean, when you look at the price that was paid, which was astronomical. Both of these purchases were the bargain of the year for Meta. And so to show that this
was the intent that they were going to monopolize. I don't know, you know how easy that's going to be. But the fact though, if it turned out it does monopolize, does the government have a much stronger case.
Yeah. So you've outlined Meta's defense here pretty much to a t, and you're absolutely right to identify that these were major deals at the time that have only proven to be even more lucrative for Meta now in twenty twenty five and twenty twelve, when Meta acquired Instagram, they did it for about a billion dollars or about fifty employees at that company. Now Instagram rakes in multiples of that every year. For the company WhatsApp they acquired in
twenty fourteen for nineteen billion dollars. That has also taken out over specifically in foreign markets where it's used as sort of like the de facto default messaging tool for many people. Meta basically says that the government is punishing them for being successful.
Right.
They made these acquisitions not because they were trying to stamp out competition, but rather because they thought it would make them more competitive in an increasingly competitive and crowded social media space. They say that these were shrewd business decisions. At the end of the day and for what it's worth.
Meta says they face a lot of competition. In a statement before this trial all kicked off, the company says that they will present evidence that will show what every seventeen year old in the world knows that Instagram, Facebook, and WhatsApp compete with the likes of TikTok, YouTube, x I Message, and many others. They also brought up companies that you might not think of as social media companies, but they say definitely are competitors here, things like Reddit,
things like LinkedIn, things like Pinterest. Meta basically wants the market definition to be very broad, because the more companies there are, the less likely they are to be saddled with the moniker of monopolist. The government, on the other hand, wants the market definition to be very narrow. They say that there are only three companies in this particular space that they're talking about within the remit of this case. There's Meta, which they say controls eighty percent of the
usership that is available to them. They say Snapchat is a competitor, and they say, wich excuse me that my Wii, which is a or excuse me me Wi which is a self described privacy first social media network that on its website claims to have over twenty million users worldwide. Right, it makes sense that the government would want this to be a small market, and that makes it easier for them to claim that that meta is dominant in that market. But clearly meta has a different definition.
So I have a question regarding market share. Google as what eighty percent seventy eighty percent of the browser world market? If I'm not mistaken, certainly in this country, and tell me if I'm wrong on this one, and if it does have an overwhelming presence, why isn't it being attacked? Maybe it is that I'm not aware of it. And then, of course the argument is do you break it up? How do you break up a single company? The meta
is easy, WhatsApp, Instagram you sell off. But the Google issue, if you can go to that, and then I'm gonna come back after the break and talk about how big a deal this actually is, can you answer the Google question?
Yes, it's interesting that you bring up Google because last year they faced a major antitrust challenge from the Department of Justice and a judge ruled that they yes, were operating an illegal monopoly in the world of online search, that they basically did the same thing that the FTC is accusing Meta of doing, using their billions, using their market power not to make a better product for consumers, but rather to muscle out competition, and as a result,
their product has calcified on the vine. It has become worse for consumers, and that's not what our antitrust law is set up to do. The prosecutors here in the Meta case want to basically make that same argument that Meta is getting rid of competitors. They're using their market power to muscle out these smaller companies, and as a result, their products have gotten worse, and that's worse for the American consumer at the end of it.
Okay, so let's give best and worst case scenarios, Mike, what is going to happen or may happen.
So the worst case scenario is what the FTC is advocating for, which is a breakup of Meta. They want the company to spin off Instagram and WhatsApp into their own discrete apps, sell them to somebody else. They say that's the only remedy to this monopoly that exists in the social media space. If that happens, Bill, that would
radically reshape Meta, no doubt. Right, This company obviously got it start with Facebook, but with the acquisition of both Instagram and WhatsApp, we've seen those two apps sort of supersed Facebook in terms of cultural influence and growth. Right. They rake in billions of dollars from those apps every single year. It would also flip the conventional playbook in Silicon Valley on its head. And I think this is
pretty interesting, right. If I am the owner of a startup in Silicon Valley, generally speaking, it's not my goal to make a company that competes with Google or Meta or Apple or Tesla. That would be great, but that's really hard, and those companies have billions of dollars to throw around and teams of lawyers that are trying to make sure that that doesn't happen. Rather, I want to build a small startup that gets acquired by those companies
to the tune of many billions of dollars. But if the government starts breaking up these tech companies, as they have been advocating to do, not just in this case, but in the Google case that we talked about a few minutes ago. Also, the FTC has a complaint filed against Amazon over similar concerns. Well, that calculus could really change in Silicon Valley, and that means that everyday users
experience is going to change. Not just is Instagram and WhatsApp going to be under the beck and call of a different company, maybe with different ideas about what those apps should be. But also we might see more variety in our social media space as Meta kind of takes a back seat to newer competitors who are emboldened and ready to compete with these companies that are seemingly on their back feet. Now, the best case scenario for Meta
is that this all goes away, right. CEO Mark Zuckerberg and President Trump have had a contentious relationship in the last few years. In fact, at one point, the President even threatened to throw Mark Zuckerberg in jail if his platforms contributed to an election loss. That of course didn't happen.
But more recently, Mark Zuckerberg has been making overtures to the Trump administration, donating a million dollars to Trump's inauguration fund a few months ago, rolling back policies that conservatives have criticized, namely getting rid of fact checkers earlier this year. Will that be enough to incentivize the Trump administration to maybe get the FTC to lay off a little bit or soften their case to a degree, maybe even except a settlement from Meta, which they say they are open
to making. That is something that you can imagine a lot of Silicon Valley is going to be paying close attention to over the next six to eight weeks or so.
These companies we're talking about, Amazon, Instagram, Meta, are all American companies other than TikTok. Are there any foreign based companies or anywhere near that level.
TikTok is the big one, and Meta has highlighted them specifically in their defense in this case, saying, hey, if you break us up, if you weaken our standing in the market, well that opens up the world here for more Chinese apps like TikTok to spread influence.
Right.
They kind of go back to the concerns that lawmakers have raised about TikTok that they could be used to spread pro China messaging or to spy on American users and what have you. So they kind of need their market power in order to fight back against that. That's the argument that Meta is making. Whether a judge will go for that, I think is an open question. The judge in this particular case is James Bosberg, who, if you follow politics, should be a film hiliar name of late.
But he has to ultimately decide whether the government is making a good enough case. He has indicated that they have a pretty steep hill to climb before this trial got underway. Despite the fact that the FTCs has emails that Mark Zuckerberg sent in twenty twelve and the lead up to the acquisition of Instagram saying that he was trying to neutralize a competitor by acquiring that company, it does seem like there's some challenges for the government here.
For one, they have to parse out the intentions of tech executives from more than a decade ago. That's really difficult. Also, the environment for social media was really different back then. And they also have to prove the hypothetical right that the world where Facebook didn't acquire these companies would have been a better world for the consumer, the average social media user. That's just not the world we live in, right, We don't live in that timeline, meaning that they have
to prove that with evidence. Despite the fact that it's a hypothetical scenario that's going.
To be How do you prove a negative which becomes almost impossible? Mike, Thank you. You put a very interesting explanation of all this made it much easier for us to understand. We'll talk again.
Great sounds good to take care, Mike.
Thebusky ABC News Technology Reporter Guide really knows this stuff