In one of the biggest defeats of the US government’s Federal Trade Commission (FTC) against tech companies, Meta has won a landmark antitrust ruling, which will ensure it doesn’t have to spin off its WhatsApp and Instagram businesses.
A federal judge in Washington said Meta did not break the law when it acquired its rivals Instagram for US$1 billion in 2012, and WhatsApp, in 2014, for US$19 billion.
The FTC had pre-emptively asked the judge to force Meta to divest itself of Instagram and WhatsApp.
The news lifted Meta shares, which were down at US$583.78 on a day when the S&P 500 index slipped more than 55 points to 6617.32, to US$599.95 at close.
In the case that has stretched for over five years, the FTC argued that Meta (then known as Facebook), purchased the companies to kill off its competitors. It said that Meta violated Section 2 of the 135-year-old Sherman Antitrust Act, a federal law that prohibits monopoly through anti-competitive practices.
In his 80-page ruling, delivered on Tuesday after the case closed in May, US District Judge James Boasberg said: “The Federal Trade Commission continues to insist that Meta competes with the same old rivals it has for the last decade, that the company holds a monopoly among that small set, and that it maintained that monopoly through anticompetitive acquisitions.
“Whether or not Meta enjoyed monopoly power in the past, though, the agency must show that it continues to hold such power now. The Court’s verdict today determines that the FTC has not done so.”
The judge added that the market has continued to expand with rivals including TikTok and YouTube.
The ruling comes as a relief to tech industry, which is reeling after two antitrust judgments went against them. Google was ruled as an illegal monopoly is search, as well as online advertising.
There is another pending case against a tech company, Amazon, in which the government accused the company of squeezing the small merchants using its platform. It is scheduled for trial in 2027. Apple is facing a case as well, for using its App Store ecosystem to the detriment of those who are part of it.
The judge said social media landscape has changed so much since the FTC filed its lawsuit in 2020, that two opinions to dismiss the case file in 2021 and 2022 did not even mention TikTok, which now “holds center stage as Meta’s fiercest rival”.
Boasberg added: “The landscape that existed only five years ago when the Federal Trade Commission brought this antitrust suit has changed markedly. While it once might have made sense to partition apps into separate markets of social networking and social media, that wall has since broken down.”
Meta argued the FTC had ignored competition from TikTok, Google’s YouTube and Apple’s messaging app, among others. It also defended its acquisitions, saying buying companies that excel in new features instead of building competitor products was a valid business strategy.
Jennifer Newstead, Meta’s chief legal officer, said in a statement: “The court’s decision today recognises that Meta faces fierce competition. Our products are beneficial for people and businesses and exemplify American innovation and economic growth.”
Joe Simonson, a spokesman for the FTC said it will review its options and added: “We are deeply disappointed in this decision. The deck was always stacked against us with Judge Boasberg.”
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