Podcast: A Guide to the FTC's Case Against Meta

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On Monday, April 14, the US Federal Trade Commission (FTC) will kick off its trial against Meta. In process for years, the case is over whether Mark Zuckerberg’s company has an illegal monopoly over social media and whether it should be forced to spin off Instagram and WhatsApp.

To prepare to cover the arguments, Tech Policy Press Associate Editor Cristiano Lima-Strong spoke to two experts to better understand the issues at play.

• William (Bill) Kovacic is a professor of law and policy and director of the Competition Law Center at the George Washington School of Law. From January 2006 to October 2011, he was a member of the Federal Trade Commission and chaired the agency from March 2008 to March 2009. And for nearly a decade, Professor Kovacic served as a Non-Executive Director with the United Kingdom's Competition and Markets Authority.
• Gene Kimmelman is a senior policy fellow at Yale’s Tobin Center for Economic Policy. He was the Justice Department’s deputy associate attorney general during the Biden administration, and he has served as chief counsel to the head of the DOJ Antitrust Division and the Senate Antitrust Subcommittee.

What follows is a lightly edited transcript of the discussion.

Cristiano Lima-Strong:

Bill, Gene, thank you both so much for joining us today. I wanted to start off by taking a bit of a flashback.

So, in 2020, the Trump administration filed two landmark antitrust lawsuits towards the end of the year. In October, it filed its lawsuit against Google alleging that the giant had a monopoly over online search, and then a few months later the Federal Trade Commission filed a lawsuit against Facebook alleging that it had monopolized what it called "personal social networking services," and, basically, seeking to unwind its acquisitions of WhatsApp and Instagram.

Now in 2023, the Google DOJ case went to trial, and last year, we got a decision, a federal court sided with the government in declaring Google a monopoly.

But the Meta trial, we are just now to the point where we are heading to a trial. Bill, talk us through a little bit, why did it take so long for there to be a decision on whether we would head to trial, and when we're finally heading into this thing.

William Kovacic:

A couple of factors. First, thanks for having me on. Delighted to be here with Gene to talk about the case. One factor is that the judges on that court have had an extremely busy docket, unusually busy filled up with lots of the cases at the time. Certainly, after early 2021 with the January 6th cases, I think Judge Boasberg had a number of those, as did Judge Mehta, who is the judge in the Google search case.

Part of it is that the parties didn't press especially hard for an earlier trial. They might have done that, but they didn't. They had additional discovery they wanted to do. They seemed comfortable with a more deliberate pace as did the judge.

But, yes. As the judge mentions in a decision that he issued in November of 2024, here we are going on five years into the case itself. As a sidebar, many observers have said that's not quite the speed of light. And we've got eight weeks in the trial going ahead. Compares in an interesting way to the case that Gene knows very well, the U.S. case against Microsoft in the late 1990s. That complaint was filed in ... Gene, was it May? May, June of 1998.

And that went to trial in October-

Gene Kimmelman:

Right.

William Kovacic:

... of the same year.

Gene Kimmelman:

Wow. Yeah. Imagine that.

William Kovacic:

That case made its way all the way through the Court of Appeals by the middle of 2001. That was a striking effort on the part of the judge, Judge Jackson, to seize control of that case and move it along.

This is a fairly stark contrast to that approach.

Cristiano Lima-Strong:

And as we've been talking about, it's been quite a bit since this was initially filed. So, you could be forgiven for forgetting some of the crux of this case.

But part of the reason that it took long to get to this way was also that the initial complaint filed by the FTC was dismissed in court. The court, at the time, had expressed concerns, reservations about this definition of personal social networking services that the FTC is hinging the case in part on. Gene, talk us through a little bit what that was about. Why did the agency initially have a hard time making this case? And how did it right the ship? Were they able to get this to go to trial?

Gene Kimmelman:

Yeah. Thanks so much, and great to be with Bill discussing this again. I think the agency was a little too flip, and, frankly, superficial in its initial complaint filing here.

This was not an obvious market to jump out at people. It was years after the transactions had happened, and I think they just didn't dot their Is and cross their Ts. Just thought they could easily get past the motion to dismiss.

So, I think that was just really poor judgment on the FTC's part at the time. But not to blame them. This is complicated, and I think part of the length of time in these, a little different than, Microsoft is that it's taken enforcers many years to really get their heads around how these digital platforms really function in the market, and what the dividing lines are between just good hard-nosed competition, and what is overstepping the bounds and violating the law.

And a part of it has to do with the fact that a lot of this is about data, it's not brick and mortar stuff. It is more traditional for antitrust. A lot of it has to do around taking advantage of the benefits of having economies of scale and a big network, which we've seen before in other industries, but, again, with data being the core of it, it isn't obvious how to present this, and it isn't obvious for judges to understand it immediately.

So, in some ways, it doesn't surprise me that these cases are taking a long time, and many antitrust cases do anyway, but I think it's a lot to digest.

Cristiano Lima-Strong:

So, we've been talking a lot about markets. I want to bring this into the statute a little bit. Of course, we're dealing with federal antitrust laws, specifically, section two of the Sherman Act, and a part of the bar here that the court is looking at is whether the company has monopoly power in a relevant market.

And so, we talked about this definition that the FTC has laid out of personal social networking services. To unpack that a little bit, the agency has argued that companies like TikTok and YouTube, which is owned by Google, are in a different category from Facebook, and are not one-to-one competitors, and that's part of how they're trying to argue that the company has a monopoly in this market.

Bill, could you unpack that a little bit and what you make of their strategy in that regard?

William Kovacic:

They're arguing that despite the availability of a number of options that might seem to be substitutes at a general level, that there are ... They're microclimates. They're niches within this area, what antitrust people call submarkets sometimes that represent competitively significant arenas in which to evaluate competition and to focus on it.

And in a general way, they're saying that within this personal social network services market, there are networks developed that promote sharing among families and friends, that there are small communities built within that framework that represent distinctive market niches.

Market niches that are not really covered, or addressed so directly by YouTube, by X, by TikTok, and that it's appropriate for the court to treat that niche as a distinctive arena in which to evaluate the competitive behavior.

And in November of 2024, Judge Boasberg issued a decision that addressed Meta's effort to obtain summary judgment in the case, to have the case dismissed, a major part of his opinion focused on market definition.

And I suppose what swayed him, ultimately, to decide, "We're going to trial," and it's an environment in which the benefit of the doubt, in effect, is given to the party opposing the motion, that would have been the FTC, emphasized, in many ways, the documentary record within the company's own files, statements made by Meta's executives that tend to acknowledge this as being a distinctive niche.

But the court several times in this decision says, "This is complicated materials." Echoing Gene's larger point, this is complicated. These industries change rapidly and in ways that don't provide an absolutely clear delineation of different products and services, but I think in many ways based on the record that comes out of Meta's own files, and out of statements made by executives and investigational hearings, that the FTC had done enough to justify sending that issue to a trial.

Cristiano Lima-Strong:

Gene says Bill alluded to the judge decided that this was a matter that should go to trial, but it's still an open question. How central is this dispute over what the market should be going to be to whether the FTC can make its case?

And then what evidence and legal jousting over this are you going to be looking for as the trial unfolds?

Gene Kimmelman:

I think this is a big deal, and I think this is really fascinating, and I think this is what makes this possibly one of the most important lead cases we're going to have coming out of the digital marketplace, because it really happens in two different time dimensions.

You're talking about now as we look at TikTok, as we look at YouTube, and we're fighting about who really competes with whom. If you're on TikTok, is your alternative really Facebook, or not?

But the core of the case is the purchase of Instagram and WhatsApp more than a decade ago, and it's partly about were those services really going to compete with Facebook?

And the judge has to deal with both of these dimensions, because first he has to determine that this really was an effort to buy to block competition, that these were potential competitors ...

Remember, this is sharing pictures, or this is messaging. At a much earlier phase with a lot of questions about the economic viability of those services, was that really what Facebook was doing at the time, or was it adjacent and different, or adjacent and close enough to where they really could converge and be head-on competitors?

And I think a lot of the relevance then of the more modern information is not just looking at market shares today, but looking to say, "If it was really designed to take out competitors, and monopolize the market, how is it that TikTok and YouTube have exploded the way they have?" Is it just that it really isn’t a problem in competition, or is it that they're really providing a different kind of service for consumers and people really want both? They want to be on a social network, and they want to be sharing videos.

So, I think you're getting this in two different time dimensions, which is what makes it most fascinating to me as an antitrust case, because the judge has to really go back and look at the time frame in which the transactions happened, but then put it into the context of a competitive process that is very dynamic.

Cristiano Lima-Strong:

So, you reference the acquisitions. For reference, Instagram was in 2012, WhatsApp was in 2014. So, we're over a decade away from both. Bill, what do you make of that timing factor? Both that the acquisitions happened then, the lawsuit was filed in 2020, and that we're dealing with a market that has evolved around these dynamics, and how that's going to play into the trial.

William Kovacic:

A guilty pleasure that I find in the trial should go ahead as planned is that we're going to have a fascinating glimpse at the FTC's decision-making over a decade ago.

Trying to wrestle with the issue that Gene mentioned before, which is would Instagram and WhatsApp, if left to their own devices, evolving independently, have become a significant competitive alternative to the broader offerings that then-Facebook, now-Meta offers?

And the FTC concluded that they did not take action. Neither one. Other government authorities around the world, likewise, stood down, and let these go ahead.

When the FTC does not act in the face of a merger, it doesn't go through a process of approving the merger. There's no such thing as a formal clearance that says, "You're on your own. We won't be bothering you about this again."

The letter says, "We're not taking action at this time." And that is meant to identify that the agency shouldn't see a problem later on, and is coming back on it.

So, we have the somewhat unusual circumstance in which the means for achieving, or protecting monopoly power challenged in a Sherman Act case, is an acquisition, or a series of acquisitions.

Meta has sought to use that earlier FTC review, and inaction, as a basis for casting the case aside. Meta has argued that the FTC took a good look at it then, and as a matter of policy, it's foolish to come back roughly a decade later, and play the match over again, and take a look at what happened. That earlier review should be decisive.

This is an argument now that twice Judge Boasberg has rejected, including in this decision in November. He said the FTC is not precluded from coming back at it.

But I think part of what we're going to see is an interesting examination of an effort that an agency made in trying to make predictions about what would unfold with respect to both of these relatively new companies, very new, and small companies. And how antitrust law goes about making predictions that it has to make in merger review about the likely future direction of competition.

So, we're going to see an interesting review of the evolution of the sector, but I think we're going to learn something about agency decision-making that may not have fully been in public view, trying to wrestle with this distinctive set of issues that Gene mentioned before.

Gene Kimmelman:

Yeah. And just to jump on that again, Bill says it very well, I think it's that difficult decision that an agency has to make that Judge Boasberg is, clearly, sympathetic to the FTC that you're not precluded, but it still has to be in his mind of, "My gosh. This is more than a decade ago, and they didn't go after it."

So, what differentiates the purchase of these two companies from the dozens of others that Facebook bought, of which there is no lawsuits. Some of them may even have been failures. Some of them, certainly, were just swallowed up and didn't seem to matter much.

And he's got a sea of distinction there. Clearly, there are documents that show a distinction, that the mindset of the Meta leadership was, that, particularly, Instagram and WhatsApp were dangerous to them, but he's still got to find a dividing line between what's anticompetitive and what's just a reasonable purchase of small upstart, interesting, technologically developing companies.

And this will make a really important precedent going forward, because if Boasberg finds that there's not enough evidence here, imagine what this does for enforcement agencies looking forward when a Google, or a Meta, or an Amazon come in with a deal and think, "Well, do we have to go after it even if we don't have much evidence? Because going after it later now appears to be much harder to do based on a precedent. Or does it open the door for agencies to make that hard judgment at the time when it's hard to predict, but still knowing that they can come in later, if they find enough evidence to show that it really was designed to take out competition?"

William Kovacic:

Yeah. It's interesting to see how in the current generation of major tech monopolization cases, how merger policy is an important subtext to the current monopolization cases. It's not simply this case, but featured so prominently in the Google ad tech case is the FTC's decision also about 15 years ago, not to act when Google purchased DoubleClick and that is front and center in the discussion about how Google obtained monopoly power.

In a sense, for the FTC here, in particular, in this case, it's a way of saying, "We miscalculated before." And for all kinds of perhaps understandable reasons, but this is a reassessment that has exactly the implications that Gene suggests for the future.

Cristiano Lima-Strong:

So, we've talked about whether the agency will be able to prove that the company has monopoly power in the market. Another question is whether it has maintained that power, exercised that power. What are some of the things that you expect the court to look at when it comes to that, Gene?

Gene Kimmelman:

I think they're going to look at particularly these other large companies that are around them, and see whether they do appear to be really going at each other head-to-head, or whether it's a little bit more shadow, dancing, splitting the pie, looking for different ways to draw customers not from each other, but in conjunction with each other.

And so, the more you see things that look like real hard-nosed head-to-head competition, I think the harder it is for Boasberg to feel that Meta had just locked that space up, lock, stock, and barrel.

But then on the flip side, the more you see that, eh, they're not really trying to take customers away from each other, they're trying to do new things around each other, even if there's no collusion, or no direct agreements, but that they're really out to maximize earnings in different ways, often with the same customer base.

Those are two very different ways of functioning in the market, and I think that's where Boasberg is going to really try to pull all the evidence together and see how it weighs out on the scale.

Bill, what are your thoughts on that?

William Kovacic:

Yeah. One thing that's intriguing will be Meta's argument about the motivation and actual effect of the mergers. This is something Gene was touching upon earlier.

One of the principal arguments will be that we did not suppress the emergence of Instagram and WhatsApp. We enabled them to flourish. We didn't bury them, we elevated them. We made them more effective, and the fact that they are so successful today is a testament to our efforts to boost them, and give them a visibility, and possibility for success that they would not have had otherwise.

They're saying that the FTC's counterfactual, which is left on their own, they would have evolved into major competitors for Facebook in a variety of ways is ill-conceived.

This brings us back to some of the documents that surrounded the decision to pursue the transactions over a decade ago. They are tantalizingly intriguing documents, which are quoted at length in the judge's opinion from November, where you see a couple of themes coming out of Meta and its chief executive.

One theme is he's being pushed by his board, by his chief financial officer to explain, "Why are you willing to spend a billion dollars on a company that has fewer than 20 employees?" And such a thin track record. Admittedly, has an intriguing product, but that seems awfully rich for what we're buying here.

And he said, "I'll explain it to you. They have the capacity to evolve in ways that could threaten us. They have a really good product, people like it, and lots of people are coming back to it.

And it won't take them long to realize that since they're getting this repeated attention and traffic, they can offer those people another suite of services as well. And soon enough, they'll be Facebook, and that's what we'll face. So, it's worth it to spend a billion now to make sure that doesn't happen."

At the same time, he mentions at the time, "We don't have a really good photo sharing capability. We've tried. We don't have it yet. This will make our experience much better."

Yeah. A major feature I think of the trial will be the motivation as it existed then, but also what has happened since? That is, what has the user experience been? With these companies under Meta's umbrella, Meta's going to say it's been much better.

The FTC has the intriguing, but perhaps difficult argument to say, "It would have been still better. Here are the other possibilities that would have emerged had they not been absorbed into the company." That will occupy a lot of time in the courtroom.

Gene Kimmelman:

I agree with that. I think that's going to be big. I think on this one, my gut tells me the government really has the stronger case here, the trajectory of where Instagram and WhatsApp were going was really quite impressive, even though, they were extremely small at the time.

So, I think with the documents that are there and some of the factual evidence about the economics of where they could go, I think that's really strong for the government.

I think this one, a little bit like the Google search case, is going to be a little easier for the government to win on the merits, but a little harder to get the huge remedy that they might be looking for.

I think that's really where it's going to be. If they are so luck as to win, I do think they will, I think that the remedy they want is going to be tough to get.

William Kovacic:

The judge has defined very clearly that's what the case is going to be all about is the request for divestiture to spin off Instagram and WhatsApp. Is now the case down to the mergers? And the natural solution to the problem identified would be the divestitures, and as Gene says, that will be a big part of the deliberations on remedies should the case get there.

Cristiano Lima-Strong:

I wasn't going to go there quite yet, but, Gene, since you raised it, Bill, do you think the government has the stronger case here, if you had to forecast here how this might play out? What are your thoughts?

William Kovacic:

I think it's a very plausible case. That is this is a plausible serious case. If I put myself into the state of mind of Judge Boasberg, I sense an underlying skepticism about it, not a crippling skepticism, but a skepticism. I'm taken by his comments at the very beginning of his opinion in which he brushes aside the proposal to dismiss the case.

In his November opinion, he says, "Prevailing here," meaning defeating the motion for summary judgment, "Does not obscure the fact that the commission faces hard questions about whether its claims can hold up to the crucible of trial. Indeed, its positions at times strain this country's creaking antitrust precedents to their limits."

Now, judges are careful about trying to seem balanced. FTC, you win here, you live to fight another day, but don't become too exuberant. It's a tempering caution that the judge offers, but I'm struck how often in the opinion he points out, "You've cleared this hurdle, but if it were a track meet, you cleared the hurdle, but you touched it. It's wavering, and you just got over."

Maybe it's better to use a pole vaulting example where the bar on the top of the pole is wavering a bit, because you touched it, but you didn't clear it this time.

So, I see it as a plausible case. It's a very responsible case, I think, for the government to litigate to address the issues that Gene was mentioning before, but I do see perhaps a general apprehension on the part of the judge about whether, or not the market's properly defined, and whether, ultimately, this divestiture would be the right solution.

Gene Kimmelman:

I agree. Bill put it beautifully by pulling back the prose of the judge. He is a very, very smart judge. And I think the ... While I agree when I read that, that it doesn't look great for the government, to describe the antitrust law as this creaking institution, it doesn't strike me that the judge really wants to hide behind that.

So, my guess is he finds liability, but he looks to see if there's another remedy short of full divestiture of companies purchased a dozen years ago.

And I think there are options that are other policy tools we've used in the past like interoperability requirements, interconnection, things that have been used in other industries that we're familiar with, that have actually worked to create space for competitors.

So, I'm counting on him being a little more creative on the remedy side to in that way moderate the impacts of this.

William Kovacic:

I think an implication of that is that if I were in the FTC trial team, the remedies people would be working really hard on offering alternatives, that don't necessarily involve the spinoff of those companies to say, "We need a good fallback here."

Cristiano Lima-Strong:

I have that exact quote from the judge here to ask you both about. So, you've beaten me to the punch. So, that's great. Just a couple more questions for you both.

I wanted to ask a little bit about evidence. FTC watchers will remember that in the agency's dispute with the company over Cambridge Analytica, there was a lot of back and forth about will Zuckerberg testify? Will executives testify?

We are expecting executives to testify in this trial. I'm just curious. In addition to witness testimony, what are some of the key pieces of evidence that you think could make, or break the government's case here. Gene, do you want to take this one?

Gene Kimmelman:

Just generically, I think what I've observed in these cases is that judges seem to look for people who they don't think bear a grudge, who are thoughtful, responsive to the questions, particularly, the ones coming from the bench, and that seem to have a lot of expertise.

So, real often it's the third-party witnesses, the people in and around the industry. I do think that he will want to see how the executives, or the company hold up under cross-examination, how they present themselves, but, often, it's whomever ... It can be the experts.

Whomever the judge finds to be really honest and straightforward, and not trying to just skew the result that matters the most. I don’t know who that will be here.

William Kovacic:

I think that's so important, and, especially, for the experts not to try to win every issue, every fight, to know where to retreat, to make concessions, to understand clearly the key positions you must defend in order to prevail, but to be aware of instances in which you must be willing to back off some of the propositions, so, that you're seen as a thoughtful and nuanced thinker, and not simply as a robot.

Cristiano Lima-Strong:

So, I want to take a bit of a step back. We've been talking about this case going to trial. Recently, there have been some reports that called into question whether that would happen. It's been reported that Mark Zuckerberg, and the company has lobbied President Trump to intervene here, and push for a settlement.

Of course, recently, we saw the president fire to Democratic commissioners at the agency, which has brought out all these questions about independence at the agency.

Wanted to get your thoughts and response to some of the reporting about a potential for settlement here. Gene, does the notion of a premature settlement here, whether it happens before there's a trial, or during a trial, after, is that something that's concerning to you?

Gene Kimmelman:

I have seen nothing that indicates that this is getting settled. I, certainly, have read the reports of Mark Zuckerberg going to the White House. I think many CEOs are, who want to curry favor with the administration.

And we, certainly have a very top-down administration at the moment. It would make total sense from a business perspective.

But there's nothing about the way this has come forward, the way it's proceeding towards trial, that would make me think that we'll see anything immediate.

You can always have a case settle at various points in the process. So, there's still a long way to go here on that issue. But I see nothing in the front-end that jumps out at me as problematic.

Cristiano Lima-Strong:

Do you see a settlement as likely, Bill? How do you see that factoring in?

William Kovacic:

I don't. It would depend so much on the terms, the conditions of it, that is you could see the two parties coming to a conclusion that they concluded, especially, the FTC concluded that divestiture would be a hard sell. We have to look for alternatives, and to put those into the discussion.

If the conversation's happening in the White House, basically, take the form of the request by Meta, simply to dismiss the case, anything can happen in life, but that seems most improbable to me.

That would be a shocking step, especially, against the backdrop of presidential proclamations, about how in the vice president's proclamations, about how scrutiny of this sector is important, the statements on the part of the FTC chair Andrew Ferguson that the tech cases are a high priority, and we're going to press on.

A dismissal would be such a jarring contradiction of that position that I wouldn't imagine that.

A difficulty I'll just mention is that when you do have the top-down intervention in government, generally, that Gene referred to before, and you have the recent declarations by the FTC leadership that, "We work for the president, there's no such thing as an independent agency, we respond to presidential direction," if there is a settlement, the question always will arise, "Where did it come from?" And are the terms compatible with the broader national interest in good competition policy?

Even if it's a pristine settlement that has superb features, the cloud exists, and it doesn't go away. An unfortunate consequence. The aggressive top-down proclamation style of government, and the FTC's observation that, "We work for you, Mr. President. We'll do what you want," is that you'll always have unwanted questions about the resolution.

But a dismissal would be quite a shock, but shocks have happened, but I wouldn't see that happening. A settlement really depends on how, clearly, the parties assess what the judge is, ultimately, likely to do, if he finds an infringement.

Gene Kimmelman:

I think one other related point on that is if there were ... A dismissal seems off the charts, but if Meta were to come forward to the ... Here, I'd imagine it would be to the White House, by the way things are working, with a really workable alternative remedy to the problem that satisfies a lot of competitive concerns, and just avoids having to litigate and have all the evidence come out, and having their CEO on the witness stand, notwithstanding the fact that there's a cloud over all of this, and it would make antitrust probably look bad, that would be plausible to me. I could see that happening, but that's really on Meta. We haven't seen that yet.

Cristiano Lima-Strong:

We've covered a lot of ground. It's been incredible to have both of you, and your wealth of knowledge in conversation with one another. So, thank you so much for doing this. We really appreciate it.

Gene Kimmelman:

Thank you.

William Kovacic:

Most grateful. Thank you.