The government should be scrutinizing Meta’s power. Unfortunately, its legal attack isn’t cutting to the heart of what keeps Meta big.
This week, I spent three days in a Washington, DC courtroom watching Mark Zuckerberg testify. He was there defending his company from being broken up by the Federal Trade Commission, which is seeking to unwind his acquisitions of Instagram and WhatsApp on the grounds that they were anticompetitive. At times, he was made uncomfortable and challenged with evidence that he wanted to “neutralize” rivals. Primarily, what I observed was the FTC’s misunderstanding of how social media works.
To establish the market it argues Meta has a monopoly in, the FTC has defined a subset of social media that it calls “personal social networking services.” This category includes apps that primarily facilitate sharing between friends and family, but for some reason, doesn’t include private messaging apps. The government argues that Meta’s only competitors in this market are Snapchat and MeWe, an obscure, blockchain-based social network that claims to have 20 million users. Conveniently for the FTC, including only these two companies gives Meta a de facto legal monopoly status in the US with 80-percent market share.
The FTC must know this market definition is ridiculous because the agency’s lead attorney for the case, Daniel Matheson, didn’t ask Zuckerberg about MeWe once during the roughly 13 hours he was on the witness stand. When he was finally asked about MeWe by Meta’s lead attorney, Mark Hansen, Zuckerberg testified that he hadn’t heard of it before the government’s lawsuit.
I sympathize with the difficulty of defining the market for an antitrust case like this, and Judge James Boasberg may ultimately disregard the FTC’s definition (or Meta’s much broader one) for his own anyway. Following Google’s loss of its ad tech monopoly case this week, it’s notable that judges have recently ruled twice in favor of the government in Big Tech antitrust lawsuits. On TV, FTC Chair Andrew Ferguson is meanwhile speaking to an audience of one by trying to frame the Meta case as a fight against censorship. That may give the FTC a political edge in scoring a win beyond the courtroom.
Whatever kind of legal wrangling the FTC is trying to do here, it’s not getting at the real source of Meta’s power, or even the actual market it operates in. If the government accurately included all the players that Meta considers competitors —TikTok, YouTube, iMessage, X, Telegram, etc.—there is simply no way it could argue that Meta has a monopoly market share in the US. Consumer behavior suggests strongly that this broader market is a reality; Meta presented internal data at trial that showed how Facebook and Instagram traffic surged when TikTok was briefly offline in the US earlier this year.
As it focuses on acquisitions from over a decade ago in a market that has undergone radical changes since then, the FTC is largely ignoring what Meta’s business thrives on: network effects. The more people there are on a social network, the harder it becomes to unseat. The lawsuit mentions this as a source of power, but it’s far from the focus of the case.
Time after time, Zuckerberg has leveraged network effects to grow his empire. He did it with Facebook to grow Instagram. In turn, the infrastructure developed for those apps has been used to scale WhatsApp, which now has nearly 3 billion users. He’s doing it again by using Instagram to grow Threads and integrating Llama-powered features into all of his apps.
”If any app gets sufficiently large, it has the opportunity to spread out and do different things,” Zuckerberg said from the witness stand. This can be an antitrust issue in its own right—Google, for instance, has been accused of using its leverage in one market to unfairly promote products in a different market—but it’s an enduring source of power that simply breaking up the company won’t solve.
Sure, spinning Instagram and WhatsApp off into different companies could create new short-term competitors. But to maintain that competition in the long run, you’d want to let people take their profiles, and possibly even their friend lists, with them to other services. This kind of thing is a privacy and regulatory nightmare to implement, but there’s no denying that people want this level of control—just look at the buzz around Bluesky and ActivityPub, the latter of which Meta has hooked Threads into. []
The FTC v. Meta trial is just getting started and may still bring damning evidence that the company needs to be broken up. However, so far, the government appears to be missing the point.
- OpenAI’s ever-growing ambitions: It’s hard to think of any company in the history of tech that is shipping faster and growing its ambitions more than OpenAI right now. Just this week, we saw the release of GPT-4.1, o3, and o4-mini, reports that it may buy Windsurf, the startup behind the AI coding tool Codeium, for $3 billion, and our scoop that Altman is quietly working on a social network. For a while, it seemed like OpenAI wanted to be the next Google. Now, I’m starting to think it actually wants to be the next Google, Meta, and Apple all in one.
- Rapid fire: Nvidia CEO Jensen Huang flew to China after the US cracked down on his chip exports to the country. / Blue Origin sent Lauren Sánchez, Katy Perry, and others briefly into space. / Anthropic is developing its own AI voice mode. / Meta blocked Apple Intelligence in its apps. / Is this the next Apple Vision headset? / Netflix is aiming to reach a $1 trillion market cap by 2023.
Noteworthy career moves / job openings:
- As part of what appears to be a broader shift in OpenAI’s safety efforts, its former head of AI preparedness, Joaquin Quiñonero Candela, is transitioning to focus on how AI can be applied in healthcare. The company also named new advisors to its “nonprofit commission.”
- Sachin Katti is Intel’s new chief technology officer and head of AI as part of a reorganization by new CEO Lip-Bu Tan.
- Grace Kao is Snap’s new chief marketing officer.
- Will Wu, Match Group’s chief product and technology officer, is leaving to “go even deeper into AI.”
- Reed Hastings continued his slow process of stepping back from Netflix by becoming a non-executive director.
- Bluesky is looking for a head of product. (Ben Werdmuller has some interesting ideas for what someone could do in the role.)
- Google is hiring for a “post-AGI” AI scientist.
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