In September 2006, Facebook’s CEO Mark Zuckerberg articulated the distinctiveness of his platform.
“Facebook is about genuine connections with actual friends,” he stated Company Posts.
Now, two decades later, this statement lies at the core of Zuckerberg’s pivotal antitrust trial against the social media giant, now called Meta, which is accused of unlawfully stifling competition. The trial essentially questions whether social networking is solely about personal relationships or something broader.
The Federal Trade Commission (FTC), which is prosecuting the case, aims to specifically characterize social networking as a service that connects friends and family. By this definition, Meta’s primary competition is with Snap, the creator of Snapchat, based on user reach. However, Meta argues that it competes with all social media platforms, including TikTok and YouTube.
“The aspect of my friends has significantly diminished,” Zuckerberg testified during the trial last month, contradicting his earlier sentiments from 2006.
The contrasting definition of social media in the case—Federal Trade Commission vs. Metaplatforms—highlights the evolution and complexity of social networking over the years. Meta has broadened its origins to become a platform for college students, with numerous other companies now creating similar products that mimic features such as the “Like” button and news feed.
In the trial’s initial four weeks, numerous executives from companies like Reddit, Pinterest, and LinkedIn appeared, yet they did little to clarify what constitutes social networking. They acknowledged competing for the same user base, albeit with different offerings.
Determining Meta’s role in this landscape will be pivotal for Judge James E. Boasberg of the U.S. District Court for the District of Columbia, who is overseeing the case.
“It’s not a walk in the park,” Judge Boasberg remarked in his opinion late last year.
The trial will assess whether Meta’s acquisition of Instagram for $1 billion in 2012 and its $19 billion purchase of WhatsApp in 2014 constituted illegal competition. The judge’s ruling could significantly influence tech markets as the industry faces ongoing bipartisan efforts to limit Silicon Valley’s influence on speech, entertainment, commerce, and computing.
Should he side with the government, which aims to dismantle Meta, it could hinder the inclination of major tech companies to acquire smaller competitors. This would disrupt the startup economy, as many founders depend on larger firms to provide liquidity for investors.
“The world we inhabit is becoming increasingly intricate, making this case significant. If the FTC prevails, we could see more vigorous antitrust enforcement,” stated Daniel Rubinfeld, a former Deputy Attorney General who was involved in the government’s antitrust action against Microsoft over two decades ago.
Under most antitrust regulations, competitive markets tend to be clearly defined, according to legal experts. Prices are typically the basis for evaluating a company’s competitive power and effects, including mergers or anti-competitive actions that raise the prices of products like airline tickets and appliances.
However, since internet companies like Meta provide services at no cost to users, this case represents a novel legal challenge.
In his opening statement, Daniel Matheson, the lead attorney for the government, accused Meta of possessing a “monopoly in U.S. personal social networking services.”
Matheson argued that Meta’s extensive network, which facilitates connections among users, was central to the company’s growth and attracted advertisers eager to reach closely connected audiences.
Meta countered by asserting that it primarily competes for user attention with platforms like YouTube and TikTok that focus on short-format videos. Mark Hansen, Meta’s chief litigator, mentioned that the company shifted into “crisis” mode following TikTok’s U.S. launch in 2018.
On Thursday, one of Meta’s attorneys queried Instagram director Adam Mosseri about the app’s resemblance to Facebook and TikTok.
“I see Instagram as being situated between the two; it aligns more closely with TikTok,” he replied. Instagram began as a platform for connecting friends but has evolved into a resource for entertainment.
Despite the influx of executives from other social media platforms, there has been little clarity regarding the market structure of the industry.
“YouTube and Instagram are the primary competitors of TikTok,” according to a 2021 internal TikTok document released by Meta’s legal team.
When queried about competition, TikTok’s business chief Adam Presser downplayed the notion, insisting that the app operates differently: “We don’t perceive it as a social app.”
YouTube, meanwhile, primarily serves entertainment needs, and it’s uncommon for users to share content or follow acquaintances on the platform, noted Aaron Filner, the company’s senior director.
As for social media platform X, Keith Coleman, vice president of product, remarked, “Many people now view it as a space to connect with friends and family, rather than just a news source.”
Experts indicated that it is normal for market definitions to be contested.
In 1997, the FTC successfully blocked the merger between Staples and Office Depot by highlighting their concentration in the office supply market, despite their claims of competition with big-box retailers like Walmart.
The following year, the government accused Microsoft of reducing competition by bundling internet browsers with their widely used Windows operating system, convincing judges to draw a narrow market definition around personal computers running on Intel chips, excluding Apple computers and handheld devices.
The FTC’s case against Meta adopts a conventional approach by narrowly defining the market; however, it also recognizes that digital realities alter the dynamics of competition, focusing on attention and user engagement. This insight comes from an FTC official involved in the agency’s lawsuit against Meta.
Judge Boasberg has kept his views largely private yet has pointed out that various social media applications share numerous characteristics, questioning whether their usage differs “only in degree.”
He mentioned that texting has largely replaced voice calls and that younger users frequently switch between different platforms and technologies.
“Are these norms in a constant state of flux?” Judge Boasberg, who does not engage with social media, queried expert witnesses.
Source: www.nytimes.com
