By Jan Wolfe, Dave Michaels and Meghan Bobrowsky

Facebook owner Meta Platforms and the Federal Trade Commission squared off Monday in a trial that could shape the future of antitrust enforcement and force the tech giant to break itself up by selling Instagram and WhatsApp.

The FTC called Meta Chief Executive Mark Zuckerberg as the first witness on Monday in the case, which is seeking to compel the company to undo its acquisitions of Instagram and WhatsApp, alleging it wields an illegal monopoly in social media. Forcing Meta to get rid of those two popular applications would devastate the company's business, which relies heavily on serving ads to users of Instagram and Facebook.

"They decided that competition was too hard and it would be easier to buy out their rivals than to compete with them," FTC attorney Daniel Matheson said of Meta's leaders during his opening statement.

Meta counters that the FTC's case ignores how people use technology today. While Facebook and Instagram were once the default options for interacting online, they face stiff competition in the age of video from YouTube, TikTok and others.

Meta lawyer Mark Hansen said consumer response to a TikTok outage in January illustrates that competition is alive and well in the social-networking industry.

"When TikTok went down, people went on Instagram," Hansen said. "People can and do substitute."

During Zuckerberg's four hours of testimony on Monday afternoon, Matheson questioned him about Facebook's branding, suggesting that it has long been focused on connecting users with family and friends. The FTC contends that there is a unique market for those platforms, which Facebook dominates.

Zuckerberg countered that, while Facebook is a vehicle for connecting with friends and family, it has morphed into "more of a broad discovery-entertainment space." He is expected to face additional questioning on Tuesday.

In recent weeks, Zuckerberg had been lobbying President Trump to settle and avoid the trial, but no deal was reached by Monday morning. Zuckerberg has made a number of conciliatory moves toward the administration, including agreeing a few months back to pay $25 million to settle a different lawsuit brought by Trump over Meta's suspension of his social-media accounts.

The FTC's case against Meta has a shaky history that dates back to the first Trump administration. Filed in late 2020, the lawsuit was dismissed the following year by U.S. District Judge James Boasberg, who found the FTC hadn't provided enough facts to back up its claims.

The FTC then filed an amended complaint during the Biden administration that Boasberg said addressed the first complaint's shortcomings, putting the case back on track. More recently, new Republican FTC Chair Andrew Ferguson has said he is committed to litigating the matter to a verdict.

Much of the case will turn on the FTC's claim that Facebook, Instagram and WhatsApp dominate the "personal social-networking" market. Consumers value the apps primarily as a way to stay in touch with friends and families, the FTC says.

Snap, not owned by Meta, competes in the market, the FTC says. But TikTok, YouTube, X and Pinterest aren't part of it, the FTC argues. They are entertainment or "shared interest" apps that have a different purpose than personal social networks, the FTC says.

Boasberg will hear evidence during a trial in Washington that is scheduled for about eight weeks. In November, the judge said enforcers had presented enough to go forward, although he added the FTC "faces hard questions about whether its claims can hold up in the crucible of trial."

A verdict will address Meta's liability. If Boasberg finds that Meta violated antitrust laws, he would rule later on a remedy, such as a breakup, to restore competition to the market.

Ads on Instagram are expected to account for roughly 50% of Meta's U.S. sales this year, according to research firm eMarketer.

"The loss of Instagram would be a huge blow to Meta's business," said Jasmine Enberg, principal analyst at eMarketer.

Instagram is growing with younger users, while Facebook is expected to decline 2% among the 18-24 age-cohort this year, per eMarketer. "Meta in many ways needs Instagram to keep up engagement and continue attracting advertisers," she said.

Facebook scooped up Instagram in 2012 because Zuckerberg feared the photo-sharing app would disrupt his company's dominance as users shifted from desktops to mobile devices, according to messages that Zuckerberg wrote at the time. The FTC is expected to lean heavily on such records to argue the acquisition was anticompetitive.

In his opening statement, Matheson highlighted emails Zuckerberg sent to a colleague in 2012 in which he said Instagram could be "very disruptive" to Facebook.

"[One] way of looking at this is that what we are really buying is time, " Zuckerberg wrote at the time.

Hansen in his opening remarks said the FTC's case hinged on a faulty premise that Instagram and WhatsApp were bound for greatness and would have competed with Facebook. In reality, he argued, Zuckerberg took risks with the acquisitions and then brought the services to new heights.

"Any way you look at it, the consumers have been the big winners," Hansen said.

The case also illustrates the difficulty of challenging digital dominance. Facebook, Instagram and WhatsApp are free to use, so Meta has never raised prices, the most obvious way monopolists exercise power.

The FTC says Meta has, however, raised the "quality-adjusted price." That is the agency's way of saying Meta has used its market power to do things -- such as putting more ads on screens or not offering strong privacy protections -- that consumers don't like. Nonetheless, users have no other options for sharing with friends and family, the FTC claims.

Meta says the arguments don't hold water. Its ads are so personalized that they improve the consumer experience on Facebook, Meta says. Its purchase of Instagram -- and the deployment of Meta's ad technology -- fueled the growth of what had been a niche app into one used by 150 million Americans, Meta says.

The FTC can also rely on market-share metrics to argue that Meta has a monopoly. Its share of personal social networking exceeds 80% if judged by how much time people use them, the FTC says.

But accepting that will turn on whether Boasberg agrees that people don't substitute between Facebook, Instagram, TikTok and YouTube.

Write to Jan Wolfe at jan.wolfe@wsj.com, Dave Michaels at dave.michaels@wsj.com and Meghan Bobrowsky at meghan.bobrowsky@wsj.com

(END) Dow Jones Newswires

April 14, 2025 17:04 ET (21:04 GMT)

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