Zuckerberg on the Stand: The Trial to Break Up Facebook Starts Monday

The Federal Trade Commission's long-awaited trial to break up Meta begins next week. Mark Zuckerberg will testify, and Big Tech on Trial will be covering it all.

Here at Big Tech on Trial, we’ve reported straight from the courtroom as the Justice Department took on Google’s Search and Ad Tech monopolies. Last August, Judge Mehta delivered an exhaustive 277-page ruling against Google’s illegal monopoly in online search. Any day now, we’ll have an opinion from Judge Brinkema as to Google’s ad tech business.

Now, starting next Monday, April 14, the Federal Trade Commission’s trial to break up Meta’s social media trifecta - Facebook, Instagram, and WhatsApp - gets underway in a DC federal court.

Welcome Brendan Benedict, a seasoned antitrust litigator, who will be joining Big Tech on Trial to report directly from the courtroom. Below, Brendan gets us up to speed and sets the stage for a public interrogation of one of the most powerful tech companies of our time.

In FTC v Meta, CEO Mark Zuckerberg faces off not only with the Federal Trade Commission, but also with Chief Judge James Boasberg of the DC District Court.

“It Is Better to Buy Than Compete”

A few years into the history of Facebook, founder Mark Zuckerberg faced a problem. By 2011, Facebook told advertisers that it “is now 95% of all social media in the U.S.” But the rise of smartphones, and the new applications they were fostering, threatened to disrupt Facebook’s dominance.

Zuckerberg, according to emails cited in the Federal Trade Commission’s amended complaint against Meta, laid out Facebook’s economic strengths and risks in clear and compelling logic. He explained that “there are network effects around social products” that make it “difficult for others to supplant them without doing something different.” Even if Facebook were to build a better photo app than its putative competitor, Instagram, it “is harder as long as Instagram keeps running as a product,” he wrote. But buying Instagram would buy Facebook time to scale to the point where “new products won’t get much traction,” he predicted.

In 2012, Facebook announced a $1 billion deal to buy Instagram, and the FTC didn’t challenge the merger. Zuckerberg summed it up to a colleague like this:

Two years later, Facebook paid $19 billion to take over WhatsApp, and again antitrust regulators let the deal close. The company was living out an observation Zuckerberg had early on: “it is better to buy than compete.”

After more than a decade, that logic will finally go on trial starting April 14 in the FTC’s case to break up the rebranded Meta. But Zuckerberg has continued to lobby for Meta on something besides the merits. First Meta tried, unsuccessfully, to have Biden FTC Chair Lina Khan removed from an earlier proceeding challenging Meta’s acquisition of virtual reality company Within over a claimed conflict. (Although Meta won that trial.) It unsuccessfully tried the move again in this case. More recently, Zuckerberg has met with President Trump three times so far in his second term, as recently as last week in a visit the Wall Street Journal reported was to stave off trial. Those meetings come after Meta donated $1 million toward President Trump’s inauguration, which Zuckerberg attended in the prominent row of tech billionaires. And Meta’s strategy at an early hearing shows hope that the company’s lead lawyer, Mark Hansen, knows a thing or two about the judge who will decide the bench trial, the Hon. James E. Boasberg, Chief Judge of the U.S. District Court for the District of Columbia—who once worked for Mark Hansen.

Meeting in smoke-filled rooms, greasing the wheels, and hiring the judge’s former boss as your lawyer are not strategies that have anything to do with the merits of the FTC’s case. But they are the strategies that Meta seems to be using. Meta could still win the FTC trial. But its efforts to avoid trial are efforts to avoid being ruled by law.

By opening its checkbook and getting special access, Meta is showing that it prefers the rule of power.

The Trial That Almost Wasn’t

The FTC’s case has taken twists and turns to reach trial nearly five years after it was brought by a 3-2 vote of the Republican-led Commission during the first Trump administration. The court dismissed the FTC’s first complaint, citing its bare allegation that Meta had at least a 60% market share as not detailed enough. And the court dismissed a parallel case brought by State Attorneys General as untimely; on appeal, the D.C. Circuit affirmed that dismissal.

In September 2021, the FTC filed an amended complaint citing new market share data and other evidence. While the FTC’s allegations that Meta’s acquisitions of Instagram and WhatsApp were anticompetitive survived Meta’s second motion to dismiss, the court was skeptical of—and dismissed on summary judgment—claims that Meta had hamstrung potential competing developers with non-compete clauses in its license agreements through 2018. The court denied summary judgment to Meta on the FTC’s other claims, while noting that the FTC “may have a tall task awaiting it at trial” and an “uphill climb” on its market definition arguments. The court also rejected the FTC’s summary judgment motion on Meta’s claimed procompetitive justifications.

Weeks before trial was set to begin, President Trump purported to remove the Commission’s two Democratic appointees, Rebecca Slaughter and Alvaro Bedoya. (President Trump appointed Commissioner Slaughter during his first term.) Their attempted firings tee up a likely look at the continuing validity of Humphrey’s Executor, the Supreme Court case that held that the President could fire FTC commissioners only for cause. If the firings were legally valid, then the remaining Commissioners, both Republicans appointed by President Biden—Melissa Holyoak and the new Chairman, Andrew Ferguson—could in theory vote to settle, withdraw, or pause the case. But neither has shown any appetite for that. Ferguson praised the Commission’s trial team for Meta as “some of the FTC’s best lawyers” just a few weeks ago.

Congressional testimony from Meta whistleblower Sarah Wynn-Williams on Wednesday should help shore up political will to see the case through to judgment. Senator Josh Hawley, the Missouri Republican, suggested that the whistleblower’s claims about Meta’s cooperation with the Chinese government show that Zuckerberg may have perjured himself in past appearances before Congress. Senator Chuck Grassley, the senior Republican from Iowa, praised Wynn-Williams for coming forward.

The FTC’s Burden of Proof

As the politics play out, the FTC’s litigation team has its work cut out for it on showing monopoly power. To win its case, the FTC must prove that Meta has a monopoly in a relevant market, and that its acquisitions of Instagram and WhatsApp helped Meta maintain that monopoly through something other than competition on the merits.

The FTC can show monopoly power with direct evidence, like the ability to profitably raise prices or diminish quality. But because Meta does not charge consumers money for its services, it’s difficult to show the classic direct evidence of a price increase. Even so, the FTC has introduced evidence that Meta can engage in price discrimination, one sign of market power, by increasing the number of ads shown to users who have greater demand for social networking. In any event, the FTC will likely rely on indirect evidence of Meta’s market power: high market share plus the existence of barriers to entry that prevent others from whittling away at Meta’s share.

Underpinning whether Meta has a monopoly is the threshold question of how to define the “relevant market” in which it has that power. The relevant market for assessing competition is twofold: a product market and a geographic market. The FTC proposes that Meta is a monopolist in a market for “Personal Social Networking Services” (we’ll call it the “PSN market”) in the United States, which is distinguished by a social purpose: a way to connect with family and friends. Inside that market are Facebook, Instagram, Snapchat, and MeWe. Meta, for its part, disputes that definition and points to other apps that it says it competes with, like LinkedIn, Reddit, and YouTube. The bigger that Meta can make the relevant market, the smaller Meta’s market share in that market, and the more likely it is to defeat the FTC’s case.

Market definition will be a central part of this trial, and we’ll dig deep into the evidence on both sides over the next couple of months. But even if the FTC wins market definition, it must also show anticompetitive effects from Meta’s acquisitions of Instagram and WhatsApp. If it does, Meta can rebut them by showing genuine procompetitive benefits from those deals that it couldn’t capture another way. The ultimate burden is on the government to show that the acquisitions hurt competition more than helped it.

Antitrust cases often come down to a battle of expert economists, each justifying that party’s market definition and study of anticompetitive effects. But this case prominently features Mark Zuckerberg’s emails and text messages, where he often uses the language of economics to explain the rationale for the Instagram and WhatsApp deals. “What people thought at Meta is not really what this case is,” Law360 quoted Meta’s lead lawyer Mark Hansen as saying. And Meta’s pretrial brief, filed on Monday, characterizes the FTC’s focus on these communications as “intent” evidence that it claims loses relevance with evidence of actual competitive effects. But the founder’s own words do pose a challenge for Meta’s experts—will they testify that Mark Zuckerberg got it wrong?

From Bowling Alone to Enshittification

In his most idealistic justifications for Facebook and social networking, Mark Zuckerberg sounds like he’s paraphrasing Robert Putnam’s classic book, Bowling Alone, even when he doesn’t explicitly cite it. Putnam made the case, around the time of the dot com boom, that American social life had deteriorated, with civic associations fading out, church attendance down, and time spent alone with television or computers increasingly replacing time spent together. Zuckerberg echoed these concerns in a 2017 Facebook post (since edited in 2021):

“[T]here has been a striking decline in the important social infrastructure of local communities over the past few decades. Since the 1970s, membership in some local groups has declined by as much as one-quarter, cutting across all segments of the population.”

Citing Facebook groups for military families and “Black Fathers,” among others, his post suggested Meta was key to reviving these kinds of connections:

“Online communities are a bright spot, and we can strengthen existing physical communities by helping people come together online as well as offline. In the same way connecting with friends online strengthens real relationships, developing this infrastructure will strengthen these communities, as well as enable completely new ones to form.”

But in the years since, Meta has been in the public eye more for its alleged shortcomings than its purported virtues. In 2019, Meta paid a $5 billion penalty to the FTC—the largest privacy settlement, fine, or judgment ever—to resolve claims that it violated a 2012 FTC order by making misrepresentations to users about their ability to control their account information. A bipartisan coalition of 34 State Attorneys General and counting have sued Meta since 2023 for its alleged harm to young users, primarily teenagers. Meta’s motion to dismiss that action was largely denied by Judge Gonzalez Rogers of the U.S. District Court for the Northern District of California in October. Dozens of class actions were filed against Meta for the Cambridge Analytica data scandal, and other actions are pending today against Meta all over the country.

Cory Doctorow has traced Meta’s rise and arguable demise as an economic lifecycle of tech platform growth, where he sees three phases. In the first phase, the platform attracts end-consumers, like Amazon Prime subscribers or Very Online Facebook aunts. Sometimes, the platform might subsidize these users to attract them. When it’s scaled on the consumer side, the platform’s second step is to leverage that network to attract developers or advertisers and shift subsidies to them. When the network scales on both sides, with durable network effects filling a “competitive moat” around the platform, in Zuckerberg’s words, its third step can be to raise prices or degrade quality on one or both sides:

Doctorow calls this third step, “enshittification,” where the platform degrades compared to past performance, and users on both sides are locked in. He points to the increase in posts and videos from “unconnected” accounts—ones Meta users don’t affirmatively elect to follow, but that advertisers pay to push—as evidence that Facebook has degraded its quality for users to sell ads and collect fees. Meta’s tech tutorial last week admitted that “unconnected” video is growing as a share of time spent on its apps. And its live demonstration of scrolling through Facebook and Instagram in court drew more than a few admissions from the Head of Instagram that “that’s an ad,” “there’s an ad,” and “that’s another ad” on the screen.

The FTC calls this the “ad load”—the percentage that ads make up of content users see. Chief Judge Boasberg’s opinions had said that Meta’s apps do not charge end users a “price,” but his summary judgment opinion noted the FTC’s theory that users pay consideration to Meta in the form of access to their information and their time spent watching advertising. And the court agreed that a quality decrease, as much as a price increase, would show anticompetitive effects—a “quality-adjusted” price increase. For users, more ads means lower quality, and with it, anticompetitive harm.

The ABC’s of Tech Tutorials: Always Be Closing

Last Friday, the court held the first of two pretrial “technology tutorials,” this one presented by Meta. The FTC took its turn on Wednesday. Chief Judge Boasberg said that other than looking at some things his kids have shown him, he had never used Facebook or Instagram; he wanted tutorials so that witnesses would not need to spend trial time explaining how the apps work to a “Luddite” judge. It was a frank admission given that the court had already issued substantive opinions on two motions to dismiss and cross-motions for summary judgment.

Tech tutorials are standard fare in patent cases, where they’re supposed to neutrally explain the technology at issue and not make argument. But Meta used the opportunity to introduce some subtle advocacy into an exercise that was nominally about how social media apps work. The charismatic head of Instagram, Adam Mosseri, walked the court through a highly produced slideshow video showcasing not just Meta’s apps, but also a whole host that Meta claims are its competitors—like LinkedIn, X, and Reddit—but that the FTC says are outside the relevant market. Less subtle were the charts at the end of the presentation with a list of purported competitors showing when they introduced similar features, setting up Meta’s market definition arguments from the start. Not be outdone, the FTC’s tutorial, led by its expert, Cliff Lampe of the University of Michigan, reframed the task to show “how people are using social media,” emphasizing the key differences between the apps in the proposed PSN market and those outside it, where users often interact pseudonymously.

The parties’ dispute over market definition is a battle between design and use. Meta’s tech tutorial suggests that LinkedIn competes with Instagram, for example, in part because both apps organize content into profiles, feeds, and messages. But the FTC’s amended complaint suggests that apps are inside or outside the PSN market based on their purpose—what people actually use them for. It’s a contest summed up by Zuckerberg himself in a 2012 chat thread weighing whether to buy Instagram:

While much will turn on expert testimony, the use-case approach seems to have the stronger legal footing for market definition. Antitrust caselaw tells us that the product market is defined “by the reasonable interchangeability of use”—not by reasonably similar interfaces or design, and Meta’s pretrial brief admits as much. Economics accepts that products are substitutes if consumers would switch between them faced with a small but significant and non-transitory price increase—usually an increase of 5%-10%. Meta, of course, does not charge a visible “list price” for consumers to build profiles there, so this test could consider an equivalent decrease in quality, privacy, or choice. Unsurprisingly, Meta disputes that the FTC could show such a decrease without benchmarking a competitive level of quality or privacy against which to judge Meta’s. For now, as the court put it at summary judgment, in defining the market, it will “look at whether two products can be used for the same purpose, and, if so, whether and to what extent purchasers are willing to substitute one for the other.” The key data point, legally and economically, is the customer’s behavior.

LinkedIn and Facebook both have feeds where users can post a status, true enough. But how many people announce their engagement or pregnancy in a LinkedIn status? And how many people write on your Facebook wall that you’re “skilled” at PowerPoint? Putting LinkedIn and Facebook in the same market because both apps have profiles, feeds, and messages is like saying that schools and prisons are the same kind of building because they both have windows, doors, and roofs. That apps have an interchangeable interface doesn’t mean that people use them like they’re substitutes. The FTC’s expert missed some opportunities to press these differences in response to questions about whether the same social sharing features exist on YouTube—they don’t, because YouTube sunset direct messages as a feature, for example, a point Lampe got to a few minutes later.

Instagram’s Mosseri also previewed some “natural experiments” in response to one of Chief Judge Boasberg’s questions about whether consumers really use a suite of these apps. Those “natural experiments” or “shocks” show spikes in usage on some apps while another app is temporarily offline. Expect Meta to make its market definition case using data from these blackouts. It tried this at summary judgment, citing studies from India that found a surge in usage of Instagram and Facebook in response to a ban of TikTok and WeChat, plus data from a six-hour outage of all Meta apps in October 2021.

Mosseri is listed as a “will call” trial witness, so this was also an opportunity for him to build credibility and rapport with Chief Judge Boasberg, who at one point joked about whether the frequent NBA videos in Meta’s tutorial were for his benefit. The 6’6” jurist, who played college basketball at Yale, said that he was giving up Friday night tickets to a women’s Final Four game to work on motion in limine rulings for this trial. The basketball wink was just the kind of detail that Mark Hansen would know from recruiting a young Boasberg—who goes by “Jeb” (please clap)—to join his firm. And it was another example of Meta using every non-merits lever at its disposal to gain a perceived advantage—even if there’s little chance it would actually influence the outcome. The FTC then couldn’t help but add a Caitlin Clark video to its tutorial.

“An Open Information Flow”

In 2007, Mark Zuckerberg stopped by his old prep school, Phillips Exeter Academy, on his way to the World Economic Forum in Davos, Switzerland. At Exeter, he justified his decision to refuse offers to buy out Facebook. “It’s not because of the amount of money,” he said. “For me and my colleagues, the most important thing is that we create an open information flow for people. Having media corporations owned by conglomerates is just not an attractive idea to me.”

Things might have changed after Facebook acquired Instagram and WhatsApp and rebranded as Meta. After last week’s tech tutorial ended, Meta’s media rep had a binder on hand that showed Meta’s presentation in slide form, but would not let the press take photos and would not make the presentation available electronically. He said that the court did not order the presentations to be filed on the docket, so they were not part of the public record and not something Meta would share—even though Meta’s presentation just aired for the public on a big screen TV in open court. Maybe you had to be on Zuck’s close friends list to get a copy.

Just before Meta’s tech tutorial, the New York Times filed a status report of its own, explaining that “Meta takes the position that only those portions of exhibits shown in open court or discussed by witnesses are ‘judicial records’ to which the public right of access attaches”—meaning that the parts of exhibits not shown in court should not be accessible by the press or public. On Tuesday, the court granted a motion from the Times to intervene in the case, and then rejected Meta’s “excerpts” approach in an order.

But ask the obvious: If Meta’s case is so strong, why doesn’t it want the public to see its tech tutorial? And if its evidence is so conclusive, why fight to limit access to excerpts of exhibits, blocking the press and the public from seeing them as a whole?

Meta is litigating like it doesn’t want to reach the merits and doesn’t want anybody to know about them. It will send its CEO to the White House and try to limit the media’s ability to share evidence—even Meta’s own exhibits—with the public instead. That doesn’t sound like a defendant that feels good about its case. It sounds like a company that believes it’s better to “buy or bury” its way out of risk.

Zuckerberg’s last-minute entreaties to the White House make this trial, like the high-profile Search and Ad Tech monopolization cases against Google, a test of the antitrust laws to hold the most powerful economic and political forces in our country accountable. Will the trial of Meta’s conduct reach a judgment? Or will Meta find one more way to avoid reaching one?

This trial is not just about whether Meta’s acquisitions were unlawful; its continuation is about whether special access can trump the good-faith application of the law to the evidence by bipartisan prosecutors.

If oligarchy is to be avoided, the antitrust laws must apply the same to every business no matter who they are.

Key Details

• The case is FTC v. Meta Platforms, Inc., No. 1:20-cv-03590-JEB (D.D.C.).

• Trial will usually run Mondays through Thursdays from 9:30 a.m. to 5:00 p.m. EDT, starting April 14 and continuing into July if need be. The court reserved 37 days for trial after previously indicating a desire to limit the parties to 90 hours of trial time apiece. By comparison, the Epic Games trial against Google in San Francisco at the end of 2023 was budgeted for 100 hours apiece and ran five weeks.

• Trial days in FTC v. Meta are: April 14-17, 21-24, 28-30; May 1, 5-8, 12-15, 19-22, 27-28; June 2-5, 12, 16, 26, 30; and July 1-3 (talk about ending with fireworks), as needed. Mark your calendars!

• If you’d like to get up to speed on the claims, evidence, and case law, we’ve rounded up key docket entries for you here: the operative amended complaint; the court’s opinion on the cross-motions for summary judgment; the FTC’s pretrial brief; and Meta’s pretrial brief.

• The parties have 68 witnesses on their “will call” lists; the FTC plans to call 8 experts and Meta, 9. Some key names to look for: C. Scott Hemphill (the FTC’s lead economist expert), Dennis W. Carlton (Meta’s lead economist expert), Mark Zuckerberg (the FTC has him down for a whopping 7 hours of testimony, by far the most of any witness on either side’s list), Sheryl Sandberg (former Meta COO and Lean In author), Curtiss Cobb (who leads something called the Demography and Survey Science Team at Meta), Adam Mosseri (the aforementioned head of Instagram), and Kevin Systrom (Instagram’s co-founder).

• Third party witnesses that may be called hail from Apple, Google, TikTok, X Corp. (f/k/a Twitter), Reddit, Pinterest, Foursquare, Path, Snap, Discord, LinkedIn/Microsoft, YouTube, Viddy, Nextdoor, Quora, Walmart, Amazon, MySpace, Strava, eBay and Tumblr/Automattic, among others. The court rejected last-minute motions to quash the subpoenas (legalese for not having to show up to court) from Google, Apple, TikTok, X, and Snap. In a twist, Kimberly Kalb Baumgarten, a marketing director at Epic Games, is on Meta’s witness list as a “will call”; she may, per the court’s order, testify remotely.

• Also keep an eye on bankers and funders. Witnesses from private equity fund DST Global (which invested in WhatsApp), Sequoia Capital, and Morgan Stanley made the witness lists.