Speaker 1: Mike Dubuski, who is ABC News Technology reporter, is with us. Mike,
Speaker 1: First of all, thank you for being with us as
Speaker 1: you do occasionally. Hey, let's get into this thing and
Speaker 1: talk about why, what, and what the outcomes may be.
Speaker 2: Yeah, so let's start with the what. This is a
Speaker 2: case that sees its origin all the way back in
Speaker 2: twenty twenty. We've been talking about this question of whether
Speaker 2: Facebook now Meta is a monopoly in the world of
Speaker 2: social media for about five years now. This started under
Speaker 2: the first Trump administration. The case was transferred over to
Speaker 2: the FTC under the Biden administration, and now it is
Speaker 2: finally going to trial after some filings and some refilings,
Speaker 2: and it has been a long process, but now we
Speaker 2: are finally seeing representatives from Meta. Mark Zuckerberg is testifying today.
Speaker 2: He also testified yesterday, and from the FTC from the
Speaker 2: federal government appearing in court arguing over some key questions.
Speaker 2: Mainly this goes back to the acquisition of Instagram in
Speaker 2: twenty twelve and the acquisition of WhatsApp in twenty fourteen.
Speaker 2: This was before the company was called Meta, it was
Speaker 2: called Facebook back then. It the government is alleging here
Speaker 2: that those acquisitions were made not because Facebook was trying
Speaker 2: to innovate technologically. They weren't trying to become more competitive. Rather,
Speaker 2: they were trying to squash out the competition. And this,
Speaker 2: the FDC says, is a violation of the eighteen ninety
Speaker 2: Sherman Antitrust Act. Now, Bill, I know that you're very
Speaker 2: familiar with the eighteen ninety Sherman Anti Trust Act, but
Speaker 2: for just listeners who are not, it states that it
Speaker 2: is illegal to maintain a monopoly by using anti competitive practices,
Speaker 2: and those practices in this case amount to buying up
Speaker 2: worthy competitors in the marketplace basically just to take them
Speaker 2: off the playing field.
Speaker 1: Okay, so one quick question. The argument's going to be
Speaker 1: they did it to create a monopoly. The defense, if
Speaker 1: I'm a defense attorney representing Meta, I'm going to say, hey,
Speaker 1: I bought this or he bought this just as a
Speaker 1: business investment because we figured this was going to make
Speaker 1: buckets of money, which, of course it turned out. I mean,
Speaker 1: when you look at the price that was paid, which
Speaker 1: was astronomical. Both of these purchases were the bargain of
Speaker 1: the year for Meta. And so to show that this
Speaker 1: was the intent that they were going to monopolize. I
Speaker 1: don't know, you know how easy that's going to be.
Speaker 1: But the fact though, if it turned out it does monopolize,
Speaker 1: does the government have a much stronger case.
Speaker 2: Yeah. So you've outlined Meta's defense here pretty much to
Speaker 2: a t, and you're absolutely right to identify that these
Speaker 2: were major deals at the time that have only proven
Speaker 2: to be even more lucrative for Meta now in twenty
Speaker 2: twenty five and twenty twelve, when Meta acquired Instagram, they
Speaker 2: did it for about a billion dollars or about fifty
Speaker 2: employees at that company. Now Instagram rakes in multiples of
Speaker 2: that every year. For the company WhatsApp they acquired in
Speaker 2: twenty fourteen for nineteen billion dollars. That has also taken
Speaker 2: out over specifically in foreign markets where it's used as
Speaker 2: sort of like the de facto default messaging tool for
Speaker 2: many people. Meta basically says that the government is punishing
Speaker 2: them for being successful.
Speaker 1: Right.
Speaker 2: They made these acquisitions not because they were trying to
Speaker 2: stamp out competition, but rather because they thought it would
Speaker 2: make them more competitive in an increasingly competitive and crowded
Speaker 2: social media space. They say that these were shrewd business decisions.
Speaker 2: At the end of the day and for what it's worth.
Speaker 2: Meta says they face a lot of competition. In a
Speaker 2: statement before this trial all kicked off, the company says
Speaker 2: that they will present evidence that will show what every
Speaker 2: seventeen year old in the world knows that Instagram, Facebook,
Speaker 2: and WhatsApp compete with the likes of TikTok, YouTube, x
Speaker 2: I Message, and many others. They also brought up companies
Speaker 2: that you might not think of as social media companies,
Speaker 2: but they say definitely are competitors here, things like Reddit,
Speaker 2: things like LinkedIn, things like Pinterest. Meta basically wants the
Speaker 2: market definition to be very broad, because the more companies
Speaker 2: there are, the less likely they are to be saddled
Speaker 2: with the moniker of monopolist. The government, on the other hand,
Speaker 2: wants the market definition to be very narrow. They say
Speaker 2: that there are only three companies in this particular space
Speaker 2: that they're talking about within the remit of this case.
Speaker 2: There's Meta, which they say controls eighty percent of the
Speaker 2: usership that is available to them. They say Snapchat is
Speaker 2: a competitor, and they say, wich excuse me that my Wii,
Speaker 2: which is a or excuse me me Wi which is
Speaker 2: a self described privacy first social media network that on
Speaker 2: its website claims to have over twenty million users worldwide. Right,
Speaker 2: it makes sense that the government would want this to
Speaker 2: be a small market, and that makes it easier for
Speaker 2: them to claim that that meta is dominant in that market.
Speaker 2: But clearly meta has a different definition.
Speaker 1: So I have a question regarding market share. Google as
Speaker 1: what eighty percent seventy eighty percent of the browser world market?
Speaker 1: If I'm not mistaken, certainly in this country, and tell
Speaker 1: me if I'm wrong on this one, and if it
Speaker 1: does have an overwhelming presence, why isn't it being attacked?
Speaker 1: Maybe it is that I'm not aware of it. And then,
Speaker 1: of course the argument is do you break it up?
Speaker 1: How do you break up a single company? The meta
Speaker 1: is easy, WhatsApp, Instagram you sell off. But the Google issue,
Speaker 1: if you can go to that, and then I'm gonna
Speaker 1: come back after the break and talk about how big
Speaker 1: a deal this actually is, can you answer the Google question?
Speaker 2: Yes, it's interesting that you bring up Google because last
Speaker 2: year they faced a major antitrust challenge from the Department
Speaker 2: of Justice and a judge ruled that they yes, were
Speaker 2: operating an illegal monopoly in the world of online search,
Speaker 2: that they basically did the same thing that the FTC
Speaker 2: is accusing Meta of doing, using their billions, using their
Speaker 2: market power not to make a better product for consumers,
Speaker 2: but rather to muscle out competition, and as a result,
Speaker 2: their product has calcified on the vine. It has become
Speaker 2: worse for consumers, and that's not what our antitrust law
Speaker 2: is set up to do. The prosecutors here in the
Speaker 2: Meta case want to basically make that same argument that
Speaker 2: Meta is getting rid of competitors. They're using their market
Speaker 2: power to muscle out these smaller companies, and as a result,
Speaker 2: their products have gotten worse, and that's worse for the
Speaker 2: American consumer at the end of it.
Speaker 1: Okay, so let's give best and worst case scenarios, Mike,
Speaker 1: what is going to happen or may happen.
Speaker 2: So the worst case scenario is what the FTC is
Speaker 2: advocating for, which is a breakup of Meta. They want
Speaker 2: the company to spin off Instagram and WhatsApp into their
Speaker 2: own discrete apps, sell them to somebody else. They say
Speaker 2: that's the only remedy to this monopoly that exists in
Speaker 2: the social media space. If that happens, Bill, that would
Speaker 2: radically reshape Meta, no doubt. Right, This company obviously got
Speaker 2: it start with Facebook, but with the acquisition of both
Speaker 2: Instagram and WhatsApp, we've seen those two apps sort of
Speaker 2: supersed Facebook in terms of cultural influence and growth. Right.
Speaker 2: They rake in billions of dollars from those apps every
Speaker 2: single year. It would also flip the conventional playbook in
Speaker 2: Silicon Valley on its head. And I think this is
Speaker 2: pretty interesting, right. If I am the owner of a
Speaker 2: startup in Silicon Valley, generally speaking, it's not my goal
Speaker 2: to make a company that competes with Google or Meta
Speaker 2: or Apple or Tesla. That would be great, but that's
Speaker 2: really hard, and those companies have billions of dollars to
Speaker 2: throw around and teams of lawyers that are trying to
Speaker 2: make sure that that doesn't happen. Rather, I want to
Speaker 2: build a small startup that gets acquired by those companies
Speaker 2: to the tune of many billions of dollars. But if
Speaker 2: the government starts breaking up these tech companies, as they
Speaker 2: have been advocating to do, not just in this case,
Speaker 2: but in the Google case that we talked about a
Speaker 2: few minutes ago. Also, the FTC has a complaint filed
Speaker 2: against Amazon over similar concerns. Well, that calculus could really
Speaker 2: change in Silicon Valley, and that means that everyday users
Speaker 2: experience is going to change. Not just is Instagram and
Speaker 2: WhatsApp going to be under the beck and call of
Speaker 2: a different company, maybe with different ideas about what those
Speaker 2: apps should be. But also we might see more variety
Speaker 2: in our social media space as Meta kind of takes
Speaker 2: a back seat to newer competitors who are emboldened and
Speaker 2: ready to compete with these companies that are seemingly on
Speaker 2: their back feet. Now, the best case scenario for Meta
Speaker 2: is that this all goes away, right. CEO Mark Zuckerberg
Speaker 2: and President Trump have had a contentious relationship in the
Speaker 2: last few years. In fact, at one point, the President
Speaker 2: even threatened to throw Mark Zuckerberg in jail if his
Speaker 2: platforms contributed to an election loss. That of course didn't happen.
Speaker 2: But more recently, Mark Zuckerberg has been making overtures to
Speaker 2: the Trump administration, donating a million dollars to Trump's inauguration
Speaker 2: fund a few months ago, rolling back policies that conservatives
Speaker 2: have criticized, namely getting rid of fact checkers earlier this year.
Speaker 2: Will that be enough to incentivize the Trump administration to
Speaker 2: maybe get the FTC to lay off a little bit
Speaker 2: or soften their case to a degree, maybe even except
Speaker 2: a settlement from Meta, which they say they are open
Speaker 2: to making. That is something that you can imagine a
Speaker 2: lot of Silicon Valley is going to be paying close
Speaker 2: attention to over the next six to eight weeks or so.
Speaker 1: These companies we're talking about, Amazon, Instagram, Meta, are all
Speaker 1: American companies other than TikTok. Are there any foreign based
Speaker 1: companies or anywhere near that level.
Speaker 2: TikTok is the big one, and Meta has highlighted them
Speaker 2: specifically in their defense in this case, saying, hey, if
Speaker 2: you break us up, if you weaken our standing in
Speaker 2: the market, well that opens up the world here for
Speaker 2: more Chinese apps like TikTok to spread influence.
Speaker 1: Right.
Speaker 2: They kind of go back to the concerns that lawmakers
Speaker 2: have raised about TikTok that they could be used to
Speaker 2: spread pro China messaging or to spy on American users
Speaker 2: and what have you. So they kind of need their
Speaker 2: market power in order to fight back against that. That's
Speaker 2: the argument that Meta is making. Whether a judge will
Speaker 2: go for that, I think is an open question. The
Speaker 2: judge in this particular case is James Bosberg, who, if
Speaker 2: you follow politics, should be a film hiliar name of late.
Speaker 2: But he has to ultimately decide whether the government is
Speaker 2: making a good enough case. He has indicated that they
Speaker 2: have a pretty steep hill to climb before this trial
Speaker 2: got underway. Despite the fact that the FTCs has emails
Speaker 2: that Mark Zuckerberg sent in twenty twelve and the lead
Speaker 2: up to the acquisition of Instagram saying that he was
Speaker 2: trying to neutralize a competitor by acquiring that company, it
Speaker 2: does seem like there's some challenges for the government here.
Speaker 2: For one, they have to parse out the intentions of
Speaker 2: tech executives from more than a decade ago. That's really difficult. Also,
Speaker 2: the environment for social media was really different back then.
Speaker 2: And they also have to prove the hypothetical right that
Speaker 2: the world where Facebook didn't acquire these companies would have
Speaker 2: been a better world for the consumer, the average social
Speaker 2: media user. That's just not the world we live in, right,
Speaker 2: We don't live in that timeline, meaning that they have
Speaker 2: to prove that with evidence. Despite the fact that it's
Speaker 2: a hypothetical scenario that's going.
Speaker 1: To be How do you prove a negative which becomes
Speaker 1: almost impossible? Mike, Thank you. You put a very interesting
Speaker 1: explanation of all this made it much easier for us
Speaker 1: to understand. We'll talk again.
Speaker 2: Great sounds good to take care, Mike.
Speaker 1: Thebusky ABC News Technology Reporter Guide really knows this stuff