I would put my earlier confidence that Meta will win the case at around 70-75%. So far, I think the worst-case scenario if the FTC wins this case is a settlement (Settlement probability: 80-85%). My arguements for a settlement include:
- Instagram is deeply integrated into Meta Platforms. As such, a divestiture will likely affect millions of small businesses. That’s an “economic harm” that the courts may not be willing to undertake. A breakup will also be technically complex.
- Divestitures of such magnitude are extremely rare in the US. Both the 2001 Microsoft trial and 2007 Whole Foods trial ended up with a settlement. In my opinion, the Microsoft antitrust case was stronger than the Meta’s case.
- FTC already asked for $18 billion for a settlement. The $18 billion headwind is much less compared to the impact of a divestiture. Therefore, Zuckerberg may ultimately choose to settle instead of divesting the apps.
- The FTC was the one that approved the acquisition of Instagram and WhatsApp. While it’s legal for them to go after past acquisitions they approved, legal scholars share the opinion that this will be considered by court. This argument was used yesterday by U.S. District Judge Leonie Brinkema when ruling against DOJ’s claims that Google’s acquisition of DoubleClick in 2008 and Admeld in 2011, were anticompetitive (page 88). I will find out whether this Google case share similarities with the Meta case.
- In my opinion, while Trump hasn’t come through for Meta in the trial phase despite the new-found friendship, he will likely push for a settlement since that will appease both sides- Meta will avoid the divestiture while the FTC will achieve meaningful behavioral concessions.
The main argument that lowered my confidence (maybe by 10%) in Meta winning the case is the fact that the “special” market definition that’s being used by the FTC has been accepted before by the court. In my opinion, Meta has also not given enough prove showing that “core business” of its platforms is not to connect friends and family. Sandberg also acknowledged in her 2022 email that connecting friends and family is the main thing they do.
The other thing that lowered my confidence is the vast amount of emails shared by Meta executives. Initially, it was claimed by legal scholars that “intent is not the same as harm”. However, court has accepted evidence of intent in the past to prove consumers harm e.g. in the case of Whole Foods acquisition of Wild Cats in 2007. In my opinion, if the FTC proves that Google+ failed because of Meta’s monopolistic practices, the probability of Meta winning the case reduces.
I also think that Meta will have a hard time proving that it did not siffle Instagram’s growth. Evidence presented indicates that Zuckerberg weighed not promoting Instagram’s usage because it was less profitable and media reports mentioned that he actually did so. According to the Verge, Kevin Systrom and Mike Krieger, co-founders of Instagram left Meta in 2018 because of Zuckerberg’s decision to limit the growth of Instagram.
Whole Foods had won its case against the FTC in the trial but lost it during an appeal.