You're listenings KFI AM six forty the Bill Handles show on demand on the iHeartRadio f KFI AM six Forday on a Tuesday morning, April fifteenth. And one of the big stories that we're going to be looking at and certainly over the next few days is this lawsuit the FTC has filed against Meta, and but for the tariff story, this thing would have exploded literally across the world. This is so important. 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 FTC says is a violation of the eighteen ninety
Sherman Anti tich Trust 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 we 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 how easy that it's going to be, but the facto, 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 tee, 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 to 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 imassage, 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, 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 has 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, 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 going to come back after the break and talk about how big a deal this actually is. Did he answer the Google question. Yes.
It's interesting that you bring up Google because last year they faced a major anti trust 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 gives 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 backseat to newer competitors who are emboldened and 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 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 accept 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 ultimate 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 a really prove 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 Debusky, ABC News Technology reporter. Guy really knows this stuff all right now? Spring break, I don't know. I was never a spring break guy, Neil. Did you ever take a spring break? Were you one of those people like to have, Yeah, like Florida or any of that. No, I didn't. I never did it either. I never did Amy.
Did you?
Oh, yeah, you were a spring breaker? Huh oh oh.
I didn't go to Florida, but we we definitely did, you know, Lake Shasta, Rent and house boats and stuff like that.
Oh wow, yeah, you were in the in crowd. I never was, so no surprise there. Here's what's going on, and I love this is there's you've heard of helicopter parenting, of course, and that is not changing. I'm going to tell you about a company which I looked at and I thought that was so terrific because it says a lot about the world of parent and kids. It's a company called grad City. It opened up in two thousand and eight. It's been around for a while, and it
organizes spring break trips for high school seniors. Now I'm assuming Amy, you did it all on your own. There was no organization, just a bunch of you got together and decided to go out and party.
Yeah, but this was college. I'm trying to think if we did anything for spring break. I think we just hung out and skated on spring break.
Yeah. No, this is high school. So yeah, I didn't do much well whatever, but students do. And so grad City just did a trip twelve hundred guests from fourteen Michigan high schools and students sleep forward to a room and guess who else comes along? Parents? Parents are joining their kids for spring break effectively saying we'll let you go for spring bak, but you're not going by yourself. Pass. Yeah, well, let me tell you, twelve hundred students went for to room.
Now the parents stay at the adults only section of the resort they rented or hotels near and by schools are not involved themselves. This is a spring break. But this part of the spring break industry, if you will, where parents are getting involved, is happening more and more.
And what does that tell you about parenting today? One that there's more helicopter parenting, parents being much more involved too, students clearly doing a lot more drugs, having a lot more sex, bringing home incredible amount of venereal disease, coming home dripping wet without any water, without any rain. That is completely disgusting and it is simply just not the same as it used to be. So amy back to you, okay, I mean you're not going to let your parents go
obviously during college or not. But typically what you do You run a house boat, you say in a bunch of you go swimming, sure and get drunk, and.
Yeah, yeah, we do that kind of thing, or we'd go to the coast or whatever. But we had organized spring break things not as big as Florida.
How that used to be. Oh, yeah, that's great. Well, you know they what they've done in Florida. I mean they've made basically a fire zone area where they bring in not only the cops with the fire departments and everybody watching out, and they're just they're shutting it down. It's zero tolerance. You show up with drugs, or you show up with any kind of bad acting. If you will, you're done.
Can you imagine Amy King drunk? Yeah, and she's sitting around with all her friends and yeah, she's like, wait a second, yeah I will. Yeah, Mini has a dress he has as Donald Pooh tigger naked.
That's not what we're talking about.
No, that's not what we're talking about.
Oh.
I just wanted to point that out. That was kind of neat Grad City. I mean, I just love business, but I never thought that they would be in the business of catering to not only students but parents.
Well, and it's different today than it used to be. Like I would have never hung out with my parents when I was my senior year and stuff, But now, like my friends who have kids, that's what they do. They love spending time with their kids where and the kids want to spend time with them different.
Than you want to. My kids want to spend time with me. They love it, well, actually they love the credit card. The second that the credit card is done, they're done. And they've made that very very clear.
I'd rather be with Max and Tracy than do anything else. Huh, I'd rather do it. I'd rather do anything else than be with my kids. All right, fair enough, we're done with that. We're done with that now.
As you can imagine, the lawp is getting sued big time because of the Palisades fire, and the argument is is that the utility didn't provide enough water to fight the Palisades fire. All right, there was that reservoir that was empty for a year, and it was three million gallons and it could have done a lot to save parts of the Palisades. We don't know, no idea, but the lawsuit's going to continue. Now. What are the defenses. Well, one of the defenses is the fire was too big.
Nothing could have saved those houses. You could have had a thirty million gallon water reservoir and nothing would have saved those houses. Okay, that's one defense. How about this one, there's one hundred and fourteen year old court ruling that says that a utility cannot be sued if it doesn't have a contract in fact to supply the resources. Here's what dwpsa LADWPS saying, since the LADWP doesn't have a contract to provide water for a fire, therefore it can't
be sued. Wait a minute, by the way, this is a big attorney for Amongertoles and Olson in LA that's defending the city and the lawsuits blaming the utility for running out of water to fight the blaze. The attorneys are arguing there was no contract to provide water for the blaze, only to provide water for your normal drinking water, your normal use. And that actually that was a case that happened one hundred and fourteen years ago. If you can imagine, this was a case in which there was
a man who had was a utility customer. Utility wouldn't pay the bill, they cut off the water, and he sued, and the at that point, the utility said, we don't have a contract anymore, we have no duty to this guy. And that's exactly what they're saying here. We don't have a duty. We don't have a contract to provide water for fire suppression. Of course, as you can imagine, the plantiffs are going crazy saying, oh no, no, this is all there's We're going to distinguish it away. It makes
no sense, but it's just kind of fun. Well, it's fun when you're talking about multi, multi billions of dollars of damages. And if you're an LEDWP customer and the losses happened, be prepared for big, big increase in water rates. All right, we're done, guys coming up, Gary and Shannon. I'm taking phone calls off the air and i'll start in just a moment eight seven seven five to two zero eleven fifty. Handle on the law, marginal legal advice eight seven seven five to two zero eleven fifty. And
there are no breaks. We don't do news or commercials or anything. So I go through them very very quickly as you can imagine, and no patience. You know that by now, All right, tomorrow morning we start all over again. Amy and Will are here for wake up call. Neil and I join from six to nine, and you've got Kno and n also part of the group. To a very minor extent. This is KFI AM six forty you've
been listening to the Bill Handle Show. Catch my Show Monday through Friday, six am to nine am, and anytime on demand on the iHeartRadio app