Meta Platforms is under fire from the US Federal Trade Commission (FTC) for allegedly withholding crucial information during the regulatory reviews of its acquisitions of Instagram and WhatsApp. This accusation emerged in a court filing as part of an ongoing lawsuit seeking to dismantle the social networking giant.
Meta, previously known as Facebook, acquired Instagram in 2012 and WhatsApp in 2014. Both acquisitions were reviewed by the FTC; Instagram underwent an in-depth review, while WhatsApp was subjected to a simpler 30-day review. Despite these evaluations, the FTC has faced significant backlash for approving these deals.
In 2020, the FTC initiated an antitrust lawsuit against Meta, accusing the company of monopolizing the personal social networking market by acquiring potential competitors. Meta is currently attempting to have the case dismissed before it goes to trial, arguing that it has heavily invested in both apps and that the FTC should not be allowed to reverse its earlier approvals.
The FTC’s recent filing, however, claims that the case involves “information Meta had in its files and did not provide” during the initial reviews. The agency contends that at Meta’s request, only a limited review was conducted, and now the FTC has access to much more evidence, including pre-acquisition documents that were not provided in 2012 and 2014.
A Meta spokesperson responded by stating that the FTC has not provided sufficient evidence to support its claims. “The evidence instead shows that Meta faces fierce competition and that Meta’s significant investment of time and resources in Instagram and WhatsApp has benefited consumers by making the apps into the services millions of users enjoy today for free,” said Chris Sgro, a Meta spokesperson. “The FTC has done nothing to build its case over the past four years, while Meta has invested billions to build quality products.”
Instagram has been a significant contributor to Meta’s success, generating $16.5 billion in the first six months of 2022, nearly 30% of the company’s overall revenue, according to court filings. However, Meta does not separately disclose Instagram’s revenue in its quarterly earnings reports.
This is not the first time Meta has been accused of withholding information that could have affected the initial merger reviews. In 2017, European antitrust regulators fined Meta 110 million euros ($122.1 million) for providing misleading information regarding the WhatsApp acquisition.
The FTC also alleges that Meta has degraded its platform for users most reliant on their apps by significantly increasing the ad load on Instagram and Facebook. Additionally, the agency claims Meta has “chronically deprived Instagram of resources to innovate and improve features.”
US District Judge James Boasberg in Washington, who is overseeing the lawsuit, has not indicated when he will rule on Meta’s request to dismiss the case nor has he set a trial date.
The case is US Federal Trade Commission v. Facebook Inc., 20-3590, US District Court for the District of Columbia.
Picture Cred: Passport to Wall Street
