Mark Zuckerberg is in court defending Meta against a Federal Trade Commission case that alleges the company wields an illegal monopoly in social media. It's a trial that could force the tech giant to potentially break itself up by selling Instagram and WhatsApp. WSJ’s Dana Mattioli explains how Zuckerberg’s efforts to get close to President Donald Trump hasn’t kept the company safe, while Jan Wolfe is in D.C. court watching the play-by-play. Jessica Mendoza hosts. Further Listening: - FTC Chair Lina Khan on Microsoft Merger, ChatGPT and Her Court Losses - 'The Facebook Files' from The Journal. - Why the FTC is Challenging a $25 Billion Supermarket Merger Sign up for WSJ’s free What’s News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices
Chapter 1: What is the Federal Trade Commission's lawsuit against Meta about?
This week, the billionaire CEO of Meta, Mark Zuckerberg, was on the stand in federal court. He was there to testify in a Federal Trade Commission lawsuit against his company.
Meta CEO Mark Zuckerberg began his testimony in one of the most highly anticipated trials in the tech world.
In a blockbuster antitrust trial to defend his social media company. Meta is accused of trying to eliminate competitors.
Chapter 2: What acquisitions are central to the FTC's antitrust case against Meta?
In a trial that could break up his social media empire. The FTC is saying that Meta, formerly Facebook, is a monopoly. The case was first filed back in 2020, and it's finally gone to trial. At its heart are two acquisitions that the company made over a decade ago of Instagram and WhatsApp.
The Federal Trade Commission sued Meta for being a monopoly, and they alleged that the company preyed on small competitors and bought them, took them off the market, before they could emerge as very big competitors to them.
That's our colleague Dana Mattioli, who covers tech investigations.
If the FTC succeeds, there's a possibility that Meta would have to divest these companies, which would be very unusual. I mean, it could mean that they have to sell Instagram and WhatsApp.
Meta says that the FTC's case ignores how people use technology today and that the company had legitimate business reasons for buying the platforms. This case is coming at a moment when a lot of large tech companies, like Apple and Amazon, are facing antitrust lawsuits. Just today, a federal judge ruled against Google, saying that the company acted illegally to maintain its dominance.
You know, there's been a bipartisan effort in recent years on antitrust. It's very strange. We have a very politically divisive climate we're in where Republicans and Democrats can't seem to agree on anything. But we have this movement on antitrust. to say that these companies have gotten too big, they've abused their power, and something has to happen.
And I think that that movement really does have legs, and we've seen really prominent people from both sides of the aisle support these efforts.
Welcome to The Journal, our show about money, business, and power. I'm Jessica Mendoza. It's Thursday, April 17th. Coming up on the show, the FTC's case against Meta finally goes to court.
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Chapter 3: How did Mark Zuckerberg's acquisition strategy shape Meta's growth?
So in 2020, the FTC files its lawsuit against Meta. And it's a time, it's actually this zeitgeisty moment when the tide has sort of turned on big tech in the U.S. These companies were held up for years and years and years as bastions of innovation, as do no harm, as, you know, feel good companies. And things start to really change in that time period.
And a lot of the big tech companies start facing scrutiny, not just from consumers, but from regulators as well.
The Justice Department and the Federal Trade Commission have agreed to split oversight on Google and Amazon.
The Justice Department is considering a probe of the iPhone maker.
The Trump administration's legal arm is suing Google for antitrust violations.
Facebook tweeted a statement at the time, saying, quote, Is it unusual for the FTC to change its position on an eight-year-old acquisition? Yeah, it's pretty unusual. The FTC's case came at the end of President Donald Trump's first term. It was a moment when Zuckerberg's relationship with Trump was particularly rocky.
This was not a very friendly relationship. A lot of conservatives were also really, really angry at Zuckerberg for donating $400 million to different election offices around the time of COVID. They thought that that benefited Democrats.
It didn't help that Trump was suspended from Facebook after the January 6th riots.
And that was something that he and his people were livid about. He'd even spoken about maybe locking Zuckerberg up, like jailing him.
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Chapter 4: What role did political relationships play in Meta's legal challenges?
And the FTC said they were thinking that it should be more of like a $30 billion settlement. When you think about the number that was on offer... For a company as big as Meta's, you know, some might find it insulting. I spoke to FTC's former chair, Lena Kahn, for my story, and she told me that the $450 million settlement offer was, quote-unquote, delusional.
And she said, you know, Mark bought his way out of competing, so I'm not surprised that he thinks he can buy his way out of law enforcement, too. What came across in our reporting was that Zuckerberg felt confident that the White House would intervene on his behalf.
And was he right to be confident? Did his efforts work?
In the end, they didn't work. And there was a big meeting held in the Oval Office a week prior to the trial starting where aides and advisors met with Trump in the Oval Office and just said, you know, that this is an important lawsuit and it should move forward. And he got his blessing.
And so, despite the fact that Trump and Zuckerberg met a lot of times since he was reelected, and even before, it seems like His advisors were telling him not to step in and stop the trial. That's correct.
There are people around Trump who have told him, and we've reported this, that don't believe this MAGA rebrand. Remember what he did to you.
Now the trial is finally here. Each side's argument after the break.
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Chapter 5: How did Meta attempt to settle the FTC lawsuit before trial?
Chapter 6: What are the broader implications of the Meta antitrust trial for Big Tech?
Welcome to The Journal, our show about money, business, and power. I'm Jessica Mendoza. It's Thursday, April 17th. Coming up on the show, the FTC's case against Meta finally goes to court.
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I think I joined Facebook in like, I don't know, 2009 or 10. I think I started in 2006. And you know how Facebook now does these like memories of old posts? I have sometimes seen just like one-line status updates from like 2012 that make me cringe very much.
A lot of photo albums.
Exactly. The Facebook of the 2010s was very different from the meta we know today. This was a time before vertical video dominated our screens. Back then, Facebook was all about status updates and comments, writing on someone's wall, and poking your friends. And then a new photo-sharing app that let people post filtered, artsy images hit the social media scene.
Instagram was this hot, upstart, small... I think it was available only for iPhones at the time. And it didn't have any advertising on it. It was really just a way for people to share photos with heavily filtered photos, I should say. And at the time, it definitely caught the attention of Mark Zuckerberg.
In 2012, Facebook bought Instagram for a billion dollars. Two years later, Facebook made another acquisition. This time, it was a quickly growing messaging platform called WhatsApp, which had a big international user base. These acquisitions were part of Zuckerberg's business strategy, one that involved scooping up successful smaller companies.
He had a certain philosophy around acquisitions and startups. You know, there's one 2008 email from him saying, it is better to buy than compete. So you could sort of see his viewpoint here that when things got big enough, rather than trying to go head to head with them, he decided to buy them and bring them under the fold.
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Chapter 7: What is the current status and significance of the Meta trial in 2024?
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You're kind of on a time limit here with us. Can you explain to the audience why that is?
Well, I came back to the bureau from the courthouse. We're on a lunch break right now in the trial in the FTC's civil lawsuit against Meadow.
Our colleague Jan Wolf has been covering the trial since it started on Monday. He says the courtroom was packed and representatives from some of the biggest tech companies like Google, TikTok and Snapchat were there to watch, particularly to see the testimony of Mark Zuckerberg. What does he look like up there? Like, what is he wearing? You know, what's his sort of demeanor?
I mean, Zuckerberg's wearing a suit and tie like, you know, he has, I think, rolled out a relatively new wardrobe in the last year or two. You know, more T-shirts, sort of more like, I don't know, edgy fashion. You know, he's just up there.
Startup tech bro fashion. Yeah, yeah, yeah.
Gold chain and all that. Like, you know, suit and tie.
Zuckerberg sat on the witness stand for more than 10 hours over the course of three days, defending his company against the FTC. And big picture here, what is the FTC trying to prove in this case against Meta?
The FTC alleges that Meta violated the Sherman Antitrust Act. And there's a section of that saying that you can't establish a monopoly through unlawful conduct. And the alleged unlawful conduct here is the acquisition of two smaller startups that were threatening Meta's formerly Facebook's business model, Instagram and WhatsApp.
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