Meta chief executive Mark Zuckerberg testified on Monday in the Federal Trade Commission's antitrust case that could lead to the break-up of the social media giant.
If government regulators prevail in their argument that Meta, previously called Facebook, has been anti-competitive, the company could be forced to restructure or sell off two of its prized assets, Instagram and WhatsApp. Instagram alone provides about half of Meta's US advertising revenue, according to some estimates.
The FTC's case originated during President Donald Trump’s first term in office, as regulators investigated accusations that Meta had used its size to crush competition in social media.
The company's purchase of Instagram in 2012 and WhatsApp two years later have become the main source of scrutiny for the FTC's case.
Wearing a dark suit, Mr Zuckerberg described past missteps as Meta tried to maintain dominance in the sector it helped to create, particularly with the rise of Instagram, and the company's failure to come up with a similar offering that could compete with it.
“We misunderstood how social engagement online was evolving,” he said when asked about Facebook’s changes in strategy with the content and algorithms that dictated what users saw on the platform. “There was a profound shift in how people engage with their friends and discovered content.”
The plan to call Mr Zuckerberg to the witness box was announced earlier on Monday during the FTC's opening argument, presented by the federal agency's lawyer Daniel Matheson.
“One hundred years of American public policy says that firms must compete if they want to succeed,” Mr Matheson said in his opening argument, which lasted for almost two hours. “Meta doesn't want to do that.”
Meta has tried to get the case thrown out but efforts so far have been unsuccessful. Reporters gathered as early as 6.30am inside the US District Court about a kilometre from the Capitol building to get a seat in courtroom 22A for the trial.
Joel Kaplan, Meta’s chief global affairs officer and former policy adviser for George W Bush, was among the Meta senior staff members in the courtroom. He typed on his phone during the FTC's opening arguments and was sitting next to the company's chief legal officer, Jennifer Newstead.
“This entire thing is grab bag of FTC theories at war with facts,” Meta's lawyer Mark Hansen said during the company's opening arguments. “They can keep saying their theories but the facts are different, and ultimately what you'll see is that the facts will prove them wrong.”
Mr Hansen claimed Meta bought Instagram and WhatsApp to improve them, and that “by any objective standard” it did so.
Yet emails displayed during the FTC’s opening statements suggest the company contemplated delaying improvements to Instagram and WhatsApp shortly after Meta bought them. The FTC alleged Meta thought it was worth buying the apps to eliminate potential competition and eventually integrate the features of Instagram and WhatsApp into the main Facebook platform.
One email from Meta’s vice president of engineering suggested Instagram “keep running as insurance”, while another email from Meta’s Instagram lead, Adam Mosseri, implied Mr Zuckerberg wanted “to stick it to IG”.
“It’s absurd that the FTC is trying to break up a great American company at the same time the [Trump] administration is trying to save Chinese-owned TikTok,” wrote Ms Newstead, Meta’s chief legal officer, on the eve of the trial. “It makes no sense for regulators to try to weaken US companies right at the moment we most need them to invest in winning the competition with China for leadership in AI.”
The FTC claims TikTok is not necessarily a competitor because it does not focus on friends and family.
In a post on Meta's platform Threads, spokesman Andy Stone described the FTC’s case as “weak”.
“The FTC cleared our acquisitions more than a decade ago,” he wrote. “They allege our only competitors are Snapchat and an app called MeWe … ignoring what every 17-year-old knows, we compete with TikTok, YouTube, X and others,” he added, underscoring the company’s message that Meta does not have the monopoly described by the FTC.
There had been some speculation that Mr Trump would try to force the FTC to settle the case with Meta, especially with the social media giant making several moves in recent months to appease the US administration.
Mr Zuckerberg appeared at Mr Trump's inauguration, several months after saying his company regretted working so closely with former president Joe Biden's administration on monitoring misinformation during the Covid-19 crisis.
The company essentially ended its independent content fact-checking team, which had become the source of anger for conservatives.
Meta also recently announced the addition of former Trump administration official Dina Powell McCormick to its board of directors.
So far, there is no indication that Mr Trump plans to intervene. FTC's lawyers did not comment on whether he had sought to get involved.
Further complicating matters is that the trial will be decided by Judge James Boasberg, who Mr Trump has accused of bias.
Throughout the trial, which is expected to last for several weeks, executives and engineers from Snapchat, Microsoft, Apple, Amazon and others are expected to be called as witnesses.
Meta's former chief executive Sheryl Sandberg and Mr Mosseri are also expected to be called. The trial continues.
