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<v Speaker 1>Mike Dubuski, who is ABC News Technology reporter, is with us. Mike,

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<v Speaker 1>First of all, thank you for being with us as

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<v Speaker 1>you do occasionally. Hey, let's get into this thing and

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<v Speaker 1>talk about why, what, and what the outcomes may be.

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<v Speaker 2>Yeah, so let's start with the what. This is a

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<v Speaker 2>case that sees its origin all the way back in

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<v Speaker 2>twenty twenty. We've been talking about this question of whether

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<v Speaker 2>Facebook now Meta is a monopoly in the world of

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<v Speaker 2>social media for about five years now. This started under

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<v Speaker 2>the first Trump administration. The case was transferred over to

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<v Speaker 2>the FTC under the Biden administration, and now it is

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<v Speaker 2>finally going to trial after some filings and some refilings,

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<v Speaker 2>and it has been a long process, but now we

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<v Speaker 2>are finally seeing representatives from Meta. Mark Zuckerberg is testifying today.

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<v Speaker 2>He also testified yesterday, and from the FTC from the

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<v Speaker 2>federal government appearing in court arguing over some key questions.

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<v Speaker 2>Mainly this goes back to the acquisition of Instagram in

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<v Speaker 2>twenty twelve and the acquisition of WhatsApp in twenty fourteen.

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<v Speaker 2>This was before the company was called Meta, it was

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<v Speaker 2>called Facebook back then. It the government is alleging here

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<v Speaker 2>that those acquisitions were made not because Facebook was trying

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<v Speaker 2>to innovate technologically. They weren't trying to become more competitive. Rather,

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<v Speaker 2>they were trying to squash out the competition. And this,

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<v Speaker 2>the FDC says, is a violation of the eighteen ninety

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<v Speaker 2>Sherman Antitrust Act. Now, Bill, I know that you're very

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<v Speaker 2>familiar with the eighteen ninety Sherman Anti Trust Act, but

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<v Speaker 2>for just listeners who are not, it states that it

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<v Speaker 2>is illegal to maintain a monopoly by using anti competitive practices,

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<v Speaker 2>and those practices in this case amount to buying up

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<v Speaker 2>worthy competitors in the marketplace basically just to take them

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<v Speaker 2>off the playing field.

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<v Speaker 1>Okay, so one quick question. The argument's going to be

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<v Speaker 1>they did it to create a monopoly. The defense, if

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<v Speaker 1>I'm a defense attorney representing Meta, I'm going to say, hey,

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<v Speaker 1>I bought this or he bought this just as a

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<v Speaker 1>business investment because we figured this was going to make

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<v Speaker 1>buckets of money, which, of course it turned out. I mean,

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<v Speaker 1>when you look at the price that was paid, which

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<v Speaker 1>was astronomical. Both of these purchases were the bargain of

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<v Speaker 1>the year for Meta. And so to show that this

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<v Speaker 1>was the intent that they were going to monopolize. I

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<v Speaker 1>don't know, you know how easy that's going to be.

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<v Speaker 1>But the fact though, if it turned out it does monopolize,

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<v Speaker 1>does the government have a much stronger case.

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<v Speaker 2>Yeah. So you've outlined Meta's defense here pretty much to

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<v Speaker 2>a t, and you're absolutely right to identify that these

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<v Speaker 2>were major deals at the time that have only proven

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<v Speaker 2>to be even more lucrative for Meta now in twenty

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<v Speaker 2>twenty five and twenty twelve, when Meta acquired Instagram, they

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<v Speaker 2>did it for about a billion dollars or about fifty

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<v Speaker 2>employees at that company. Now Instagram rakes in multiples of

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<v Speaker 2>that every year. For the company WhatsApp they acquired in

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<v Speaker 2>twenty fourteen for nineteen billion dollars. That has also taken

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<v Speaker 2>out over specifically in foreign markets where it's used as

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<v Speaker 2>sort of like the de facto default messaging tool for

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<v Speaker 2>many people. Meta basically says that the government is punishing

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<v Speaker 2>them for being successful.

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<v Speaker 1>Right.

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<v Speaker 2>They made these acquisitions not because they were trying to

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<v Speaker 2>stamp out competition, but rather because they thought it would

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<v Speaker 2>make them more competitive in an increasingly competitive and crowded

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<v Speaker 2>social media space. They say that these were shrewd business decisions.

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<v Speaker 2>At the end of the day and for what it's worth.

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<v Speaker 2>Meta says they face a lot of competition. In a

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<v Speaker 2>statement before this trial all kicked off, the company says

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<v Speaker 2>that they will present evidence that will show what every

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<v Speaker 2>seventeen year old in the world knows that Instagram, Facebook,

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<v Speaker 2>and WhatsApp compete with the likes of TikTok, YouTube, x

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<v Speaker 2>I Message, and many others. They also brought up companies

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<v Speaker 2>that you might not think of as social media companies,

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<v Speaker 2>but they say definitely are competitors here, things like Reddit,

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<v Speaker 2>things like LinkedIn, things like Pinterest. Meta basically wants the

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<v Speaker 2>market definition to be very broad, because the more companies

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<v Speaker 2>there are, the less likely they are to be saddled

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<v Speaker 2>with the moniker of monopolist. The government, on the other hand,

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<v Speaker 2>wants the market definition to be very narrow. They say

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<v Speaker 2>that there are only three companies in this particular space

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<v Speaker 2>that they're talking about within the remit of this case.

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<v Speaker 2>There's Meta, which they say controls eighty percent of the

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<v Speaker 2>usership that is available to them. They say Snapchat is

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<v Speaker 2>a competitor, and they say, wich excuse me that my Wii,

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<v Speaker 2>which is a or excuse me me Wi which is

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<v Speaker 2>a self described privacy first social media network that on

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<v Speaker 2>its website claims to have over twenty million users worldwide. Right,

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<v Speaker 2>it makes sense that the government would want this to

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<v Speaker 2>be a small market, and that makes it easier for

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<v Speaker 2>them to claim that that meta is dominant in that market.

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<v Speaker 2>But clearly meta has a different definition.

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<v Speaker 1>So I have a question regarding market share. Google as

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<v Speaker 1>what eighty percent seventy eighty percent of the browser world market?

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<v Speaker 1>If I'm not mistaken, certainly in this country, and tell

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<v Speaker 1>me if I'm wrong on this one, and if it

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<v Speaker 1>does have an overwhelming presence, why isn't it being attacked?

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<v Speaker 1>Maybe it is that I'm not aware of it. And then,

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<v Speaker 1>of course the argument is do you break it up?

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<v Speaker 1>How do you break up a single company? The meta

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<v Speaker 1>is easy, WhatsApp, Instagram you sell off. But the Google issue,

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<v Speaker 1>if you can go to that, and then I'm gonna

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<v Speaker 1>come back after the break and talk about how big

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<v Speaker 1>a deal this actually is, can you answer the Google question?

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<v Speaker 2>Yes, it's interesting that you bring up Google because last

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<v Speaker 2>year they faced a major antitrust challenge from the Department

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<v Speaker 2>of Justice and a judge ruled that they yes, were

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<v Speaker 2>operating an illegal monopoly in the world of online search,

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<v Speaker 2>that they basically did the same thing that the FTC

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<v Speaker 2>is accusing Meta of doing, using their billions, using their

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<v Speaker 2>market power not to make a better product for consumers,

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<v Speaker 2>but rather to muscle out competition, and as a result,

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<v Speaker 2>their product has calcified on the vine. It has become

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<v Speaker 2>worse for consumers, and that's not what our antitrust law

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<v Speaker 2>is set up to do. The prosecutors here in the

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<v Speaker 2>Meta case want to basically make that same argument that

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<v Speaker 2>Meta is getting rid of competitors. They're using their market

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<v Speaker 2>power to muscle out these smaller companies, and as a result,

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<v Speaker 2>their products have gotten worse, and that's worse for the

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<v Speaker 2>American consumer at the end of it.

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<v Speaker 1>Okay, so let's give best and worst case scenarios, Mike,

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<v Speaker 1>what is going to happen or may happen.

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<v Speaker 2>So the worst case scenario is what the FTC is

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<v Speaker 2>advocating for, which is a breakup of Meta. They want

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<v Speaker 2>the company to spin off Instagram and WhatsApp into their

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<v Speaker 2>own discrete apps, sell them to somebody else. They say

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<v Speaker 2>that's the only remedy to this monopoly that exists in

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<v Speaker 2>the social media space. If that happens, Bill, that would

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<v Speaker 2>radically reshape Meta, no doubt. Right, This company obviously got

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<v Speaker 2>it start with Facebook, but with the acquisition of both

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<v Speaker 2>Instagram and WhatsApp, we've seen those two apps sort of

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<v Speaker 2>supersed Facebook in terms of cultural influence and growth. Right.

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<v Speaker 2>They rake in billions of dollars from those apps every

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<v Speaker 2>single year. It would also flip the conventional playbook in

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<v Speaker 2>Silicon Valley on its head. And I think this is

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<v Speaker 2>pretty interesting, right. If I am the owner of a

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<v Speaker 2>startup in Silicon Valley, generally speaking, it's not my goal

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<v Speaker 2>to make a company that competes with Google or Meta

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<v Speaker 2>or Apple or Tesla. That would be great, but that's

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<v Speaker 2>really hard, and those companies have billions of dollars to

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<v Speaker 2>throw around and teams of lawyers that are trying to

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<v Speaker 2>make sure that that doesn't happen. Rather, I want to

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<v Speaker 2>build a small startup that gets acquired by those companies

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<v Speaker 2>to the tune of many billions of dollars. But if

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<v Speaker 2>the government starts breaking up these tech companies, as they

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<v Speaker 2>have been advocating to do, not just in this case,

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<v Speaker 2>but in the Google case that we talked about a

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<v Speaker 2>few minutes ago. Also, the FTC has a complaint filed

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<v Speaker 2>against Amazon over similar concerns. Well, that calculus could really

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<v Speaker 2>change in Silicon Valley, and that means that everyday users

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<v Speaker 2>experience is going to change. Not just is Instagram and

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<v Speaker 2>WhatsApp going to be under the beck and call of

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<v Speaker 2>a different company, maybe with different ideas about what those

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<v Speaker 2>apps should be. But also we might see more variety

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<v Speaker 2>in our social media space as Meta kind of takes

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<v Speaker 2>a back seat to newer competitors who are emboldened and

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<v Speaker 2>ready to compete with these companies that are seemingly on

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<v Speaker 2>their back feet. Now, the best case scenario for Meta

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<v Speaker 2>is that this all goes away, right. CEO Mark Zuckerberg

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<v Speaker 2>and President Trump have had a contentious relationship in the

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<v Speaker 2>last few years. In fact, at one point, the President

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<v Speaker 2>even threatened to throw Mark Zuckerberg in jail if his

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<v Speaker 2>platforms contributed to an election loss. That of course didn't happen.

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<v Speaker 2>But more recently, Mark Zuckerberg has been making overtures to

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<v Speaker 2>the Trump administration, donating a million dollars to Trump's inauguration

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<v Speaker 2>fund a few months ago, rolling back policies that conservatives

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<v Speaker 2>have criticized, namely getting rid of fact checkers earlier this year.

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<v Speaker 2>Will that be enough to incentivize the Trump administration to

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<v Speaker 2>maybe get the FTC to lay off a little bit

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<v Speaker 2>or soften their case to a degree, maybe even except

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<v Speaker 2>a settlement from Meta, which they say they are open

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<v Speaker 2>to making. That is something that you can imagine a

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<v Speaker 2>lot of Silicon Valley is going to be paying close

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<v Speaker 2>attention to over the next six to eight weeks or so.

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<v Speaker 1>These companies we're talking about, Amazon, Instagram, Meta, are all

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<v Speaker 1>American companies other than TikTok. Are there any foreign based

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<v Speaker 1>companies or anywhere near that level.

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<v Speaker 2>TikTok is the big one, and Meta has highlighted them

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<v Speaker 2>specifically in their defense in this case, saying, hey, if

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<v Speaker 2>you break us up, if you weaken our standing in

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<v Speaker 2>the market, well that opens up the world here for

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<v Speaker 2>more Chinese apps like TikTok to spread influence.

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<v Speaker 1>Right.

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<v Speaker 2>They kind of go back to the concerns that lawmakers

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<v Speaker 2>have raised about TikTok that they could be used to

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<v Speaker 2>spread pro China messaging or to spy on American users

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<v Speaker 2>and what have you. So they kind of need their

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<v Speaker 2>market power in order to fight back against that. That's

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<v Speaker 2>the argument that Meta is making. Whether a judge will

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<v Speaker 2>go for that, I think is an open question. The

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<v Speaker 2>judge in this particular case is James Bosberg, who, if

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<v Speaker 2>you follow politics, should be a film hiliar name of late.

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<v Speaker 2>But he has to ultimately decide whether the government is

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<v Speaker 2>making a good enough case. He has indicated that they

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<v Speaker 2>have a pretty steep hill to climb before this trial

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<v Speaker 2>got underway. Despite the fact that the FTCs has emails

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<v Speaker 2>that Mark Zuckerberg sent in twenty twelve and the lead

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<v Speaker 2>up to the acquisition of Instagram saying that he was

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<v Speaker 2>trying to neutralize a competitor by acquiring that company, it

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<v Speaker 2>does seem like there's some challenges for the government here.

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<v Speaker 2>For one, they have to parse out the intentions of

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<v Speaker 2>tech executives from more than a decade ago. That's really difficult. Also,

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<v Speaker 2>the environment for social media was really different back then.

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<v Speaker 2>And they also have to prove the hypothetical right that

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<v Speaker 2>the world where Facebook didn't acquire these companies would have

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<v Speaker 2>been a better world for the consumer, the average social

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<v Speaker 2>media user. That's just not the world we live in, right,

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<v Speaker 2>We don't live in that timeline, meaning that they have

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<v Speaker 2>to prove that with evidence. Despite the fact that it's

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<v Speaker 2>a hypothetical scenario that's going.

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<v Speaker 1>To be How do you prove a negative which becomes

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<v Speaker 1>almost impossible? Mike, Thank you. You put a very interesting

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<v Speaker 1>explanation of all this made it much easier for us

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<v Speaker 1>to understand. We'll talk again.

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<v Speaker 2>Great sounds good to take care, Mike.

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<v Speaker 1>Thebusky ABC News Technology Reporter Guide really knows this stuff