In a 2008 email, Mark Zuckerberg wrote that “it is better to buy than to compete.” Now, the Federal Trade Commission is trying to prove that Zuckerberg applied that same thinking when he acquired Instagram and WhatsApp, thereby snuffing out two emerging competitors to secure Facebook’s social networking supremacy.
This argument is at the heart of the FTC’s long-awaited legal showdown with Meta, which kicked off Monday. The lawsuit was filed during Trump’s first term before being refiled in 2021 under the Biden FTC. It hinges on whether the company violated antitrust law by scooping up companies that threatened its social networking monopoly in what the government calls a “buy or bury” scheme. The case, which is being tried in a Washington DC district court, is expected to last months and will feature testimony from Zuckerberg himself and other top officials, including former chief operating officer Sheryl Sandberg.
“For more than 100 years, American public policy has insisted firms must compete if they want to succeed,” Daniel Matheson, the F.T.C.’s lead litigator, said Monday, according to The New York Times. “The reason we are here is that Meta broke the deal.”
As the FTC makes its case, it will point to Zuckerberg’s words as a smoking gun.
In emails throughout the years, Zuckerberg repeatedly referred to acquisitions as a way of buying Facebook a chance to catch up to what other social networks were doing. After the company’s failed attempt to acquire Twitter, for one, Zuckerberg wrote in an email in 2008, “I was looking forward to the extra time that would have given us to get our product in order.” Four years later, as he made the case for buying Instagram, he wrote, “[W]hat we’re really buying is time,” noting that buying Instagram would “give us a year or more to integrate their dynamics before anyone can get close to their scale again.”
The FTC’s lawsuit points to other executives’ communications as well. After Facebook acquired Instagram for $1 billion, emails showed Instagram co-founder Kevin Systrom asking why Facebook was limiting promotion of his app. In response, another Facebook executive said that the company’s vice president of product Chris Cox, was concerned “about Instagram’s feed cannibalizing our own.” All of this, the FTC argues in the suit, amounts to clear evidence that “Facebook neutralized Instagram as an independent competitor.”
Zuckerberg’s emails suggest a similar strategy, the FTC argues, when it came to acquiring WhatsApp. Fresh off the Instagram purchase, Zuckerberg wrote in an email, “WhatsApp is already ahead of us in messaging in the same way Instagram was ‘ahead’ of us in photos” and said he would “pay $[1 billion] for them if we could get them.” Two years later, Facebook bought WhatsApp for $19 billion. “For the second time in two years, Facebook employees celebrated the neutralization of an existential competitive threat,” the FTC’s complaint reads.
The company now known as Meta has called the FTC’s case “weak.” In a blog post Sunday, the company’s chief legal officer Jennifer Newstead wrote that both Instagram and WhatsApp have become “better, more reliable and more secure” under Meta’s ownership. Newstead also pointed to the challenges inherent to the FTC’s case. To prove that Meta harmed competition to protect its monopoly, the government must first define the market that Meta dominates. The FTC has tried to define that market narrowly so as not to include competitors like TikTok or YouTube because including those other giants would make it far more difficult for the FTC to argue that Meta controls a dominant share of the market.
“They’ve gerrymandered a fictitious market in which Facebook and Instagram compete only with Snapchat and an app called MeWe,” Newstead wrote. “In reality, more time is spent on TikTok and YouTube than on either Facebook or Instagram.”
For Meta, the stakes of the case couldn’t be higher, which might have something to do with Zuckerberg’s recent MAGA transformation. A loss in court could mean the potential break up of the company, forcing Meta to divest from WhatsApp and Instagram. Earlier this month, Zuckerberg reportedly sought to avoid that possibility by lobbying Donald Trump to settle the case during a meeting at the Oval Office. But in an interview with Bloomberg last month, FTC chair Andrew Ferguson said, “We don’t intend to sort of take our foot off the gas.”
