A Judge Weighs Whether to Unwind Instagram and WhatsApp
The trial in the government's long-running case against Meta concluded this year, leaving a federal court to decide whether acquisitions approved more than a decade ago should be reversed.
The government's case seeking to break up Meta has been tried, and a federal judge is now deciding whether to order the company to divest Instagram and WhatsApp — acquisitions completed in 2012 and 2014 and cleared by regulators at the time.
The theory is that the company acquired nascent competitors to neutralize them, and that the resulting position in personal social networking has been maintained by that conduct rather than by competition on the merits.
The defense
Meta's argument has two parts. The first is factual: that the products it bought were small, unprofitable and unproven, and that their scale today is the result of investment the acquirer made rather than value it captured.
The second is about market definition. The company argues that it competes for attention with every video, messaging and entertainment application available, and that a market defined narrowly around "personal social networking" is drawn to produce the conclusion the government wants.
What a divestiture would involve
Unwinding an integration that has run for more than a decade is not a matter of separating corporate entities. The advertising system, the identity infrastructure, the content moderation apparatus and the data architecture were built together.
Courts are generally reluctant to order structural relief of this complexity, which is one reason the government's request in the parallel search case was declined. The counterargument is that behavioral remedies in technology markets have consistently underperformed, and that structural relief is the only kind that does not require permanent supervision.
The stakes beyond the parties
An order to divest would be the most significant structural antitrust remedy in the United States since the breakup of the Bell system, and it would establish that clearance at the time of a merger does not immunize it forever.
A decision for the company would confirm the practical difficulty of challenging consummated acquisitions and would push enforcement further toward the merger review stage — where, this year, deal volume has reached record levels.
