00:00 News Anchor
The first week of Meta’s landmark antitrust trial underway. CEO Mark Zuckerberg claiming the company has no monopoly as the FTC argues the tech giant illegally maintained a monopoly in the social media market by acquiring Instagram and WhatsApp. Joining us now, Slade Bond, Cuneo, Gilbert and Ludica public policy and legislative affairs practice chair. Thank you so much for being here with us, Slade. Talk to me about what you anticipate coming out of this trial. It’s obviously expected to last about two months here, but what are you thinking this is going to look like two months from today?
00:48 Slade Bond
Well, thank you first of all for having me, Madison. This is a blockbuster trial that is decades in the making. Years of investigation and work in the making. And the FTC is alleging, as you said, that not only is Meta a monopoly, it has been for more than a decade, but they maintained that monopoly through a series of anti-competitive acquisitions of Instagram, WhatsApp and other companies. And we are really in a pivotal moment. This is a make or break case for antitrust for not just this market but for the US economy at large. It’s a big case, it’s years in the making and it’s going to mean a lot not just to the companies that are competing with Meta but small startups, builders that really want to compete on the merits that just want an opportunity to compete.
02:17 News Anchor
And talk to me about some of the data that you have crunched the numbers on that indicates just how much this could cost Meta moving forward because that’s obviously of high interest to investors who want to know what the financial stakes are here.
02:37 Slade Bond
Well, that’s what’s so interesting, Madison. What we found in trial this week is that Mark Zuckerberg actually emailed his team about this question a few years ago, back when antitrust scrutiny was first taken off. And he had this thought experiment about maybe it would actually be healthy for the company if they’re not enmeshed in all of these investigations, if they’re not constantly defending their conduct going back to 2012. And instead, they’re actually focusing on innovation. And he thought that could be quite good for the company. Um, and we’ve seen this in other markets as well where you have immense anti-trust scrutiny, immense litigation, and companies are actually stronger on the other side of this. Brad Smith, the president of Microsoft has made this point a number of times that Microsoft going through the challenges of a monopolization trial actually made it stronger as a company. And you look at the market caps of these companies and it is prima facia evidence that they are succeeding and thriving notwithstanding when by the rules of the road for competition. So I think investors should not be scared off by anti-trust litigation. I think the opposite is true that to the extent that Meta is focusing on building the next great product and not just copying its competitive threats, not just gobbling up competitors. You’re really going to see innovation take off. Um, and again, don’t take it from me. This is something that Mark Zuckerberg was saying to his team several years ago.
04:46 News Anchor
And Slade, we’ve got Stuart Kaiser with Citi here in studio with us. Do you, Stuart, you have a question?
04:55 Stuart Kaiser
I guess, you know, if if they were to rule against Meta, is the outcome a breakup? Is it a spin-off? Is it fines? Like, how should investors think about what what that next phase would look like if it were to go in that direction?
05:17 Slade Bond
Well, there are several things that have to happen in this case before we get there first. And the big thing happening in the litigation this week is really around something called market definition, which is incredibly wonky, but very important in antitrust litigation. And essentially, what the FTC is alleging is that Meta is competing in a market for personal social networking services, which is admittedly very technical. Um, and Meta on the other end is saying they compete with Apple’s iMessage, with YouTube, with Tik Tok, and basically any company that has similar functionality to Facebook or Instagram in this case. And that’s simply not true. That’s not something that has shown up in Meta’s documents. It’s not how it views its market, it’s not how Mark Zuckerberg has talked to his other executives about how he views the market, but it’s what they’re saying now. So, Judge Boasberg, who’s the presiding judge in the case, has to be convinced that Meta has monopoly power in this relevant market and that they abused that monopoly power and that there are no pro-competitive justifications, reasons why consumers were better off notwithstanding Meta’s monopolization. But once we get there, and it’s going to take a long time as Madison said, once we get there, I think divestiture is on the table. This is a case of monopolization by acquisition. The judge has already said in the case that that is one of the most prime examples of anti-competitive effects. You can’t find better examples. And I think divestiture is on the table. Now whether it’s Instagram or WhatsApp, I think that remains to be seen. I think there’s a stronger case so far, based on what Judge Boasberg has said that Instagram is prime for being broken off from Meta’s family of apps. But the bottom line is that the court has to be convinced that that’s going to be pro innovation, pro consumer, pro competition. And I think it will. I think that we’ve seen during the period of Meta’s monopolization that the newsfeed has really become what I like to call pink slime. There’s a lot of content that people don’t want to see. I think we learned earlier in the case is that the most common complaint among Meta users is that they just don’t see their friends’ content anymore. It was like three out of four complaints. Um, and that they’re seeing more ads than they would in a competitive market. And that’s something that Mark is apparently called an ad tax. Like they recognize that they have the ability to turn the lever left or right on how many ads you see, what kind of content you see in the interest of harvesting and monetizing your attention. So going back to your question on like how likely a breakup might be, I I think this is an incredibly legally strong case for it. I think the case law is incredibly supportive and there is a high bar, a high evidentiary bar to get there, and it’s going to take some time, but I think it’s totally on the table.
09:17 News Anchor
Yeah.
09:47 News Anchor
Yeah.
10:15 News Anchor
Yeah.