Decoding Meta’s monopoly scrutiny and expanding advertising empire
In 2012, Facebook made what would later be called "the bargain of the century" when it acquired photo-sharing app Instagram for $1 billion. Just two years later, in 2014, the company followed with a $19 billion purchase of messaging platform WhatsApp. At the time, Facebook was a growing social network facing the critical transition to mobile platforms. This was a challenge that threatened its desktop-oriented business model. These acquisitions transformed the company from a single social network into what would eventually become Meta Platforms, which controls multiple channels of digital communication used by billions worldwide.
A decade later, these moves that helped cement Meta's dominance have placed the company in the crosshairs of regulators. In April 2025, CEO Mark Zuckerberg found himself defending these same acquisitions in a Washington, DC courtroom, as the Federal Trade Commission (FTC) seeks to unwind what it claims were illegal purchases that created a social media monopoly. Meanwhile, as this legal battle unfolds, Zuckerberg is simultaneously pursuing an even more ambitious goal: leveraging Meta's massive user data and technological prowess to refine the advertising industry through artificial intelligence.
Inside the courtroom showdown
The FTC's high-profile antitrust lawsuit against Meta commenced on April 14, 2025, after years of procedural battles. Chief Judge James Boasberg is presiding over arguments concerning whether Facebook illegally monopolised the market for "personal social networking services" through its strategic acquisitions of Instagram and WhatsApp.
This case originated in December 2020, when then-New York Attorney General Letitia James, alongside 47 other state and regional attorneys general, announced a sweeping antitrust action against Facebook. Though Judge Boasberg initially dismissed the complaint, he later allowed an amended version to proceed, citing its "far more robust and detailed" factual basis for the monopolisation claims.
What hangs in the balance is nothing less than the potential dismantling of Meta's carefully constructed digital empire. The FTC is advocating for Instagram and WhatsApp to be sold off as independent entities, a solution that would potentially reshape the future of the social media company and how billions of people communicate online.
Acquisitions that changed everything
Central to the trial is Meta's 2012 acquisition of Instagram for $1 billion. Back then, this purchase raised eyebrows for its expensive price tag for a 13-employee company with zero revenue.
During the ongoing trial, Kevin Systrom, Instagram's co-founder, revealed that prior to the acquisition, the social media platform was experiencing "exponential, unstoppable" growth, with 25,000 new users registering on its launch day alone. After winning Apple's prestigious "App of the Year" recognition, user registrations skyrocketed." This testimony directly challenges Meta's narrative that Instagram required Facebook's resources and expertise to achieve its current success.
"We were a threat to their growth," Systrom testified. He described how Zuckerberg maintained "mixed feelings" about Instagram, with sentiments fluctuating based on how the photo-sharing app affected engagement metrics on Facebook's main platform. "Depending on the temperature of that feeling, we would get more investment or less investment," Systrom explained.
Systrom also claimed Meta repeatedly reduced growth resources allocated to Instagram and refused adequate trust and safety staffing even after the Cambridge Analytica scandal highlighted such needs across the company's platforms. When directly asked if joining Meta provided Instagram with the growth acceleration it needed, Systrom noted that it was a "mixed bag," suggesting many of Facebook's acquisition promises remained unfulfilled.
If Instagram were an expensive snack, WhatsApp was a lavish feast. Meta's acquisition of WhatsApp for $19 billion in 2014 represents another pivotal element of the FTC's case against the company.
Internal documents revealed during trial proceedings demonstrate that Facebook executives harboured serious concerns about WhatsApp's growth trajectory. In 2012, Javier Olivan, who managed Facebook's messaging initiatives, instructed staff to "compile a 'this shit is getting scary deck'" documenting the global growth of messaging applications that were increasingly adding social features to their platforms.
Former Meta executive Amin Zoufonoun testified about "spirited debates" within Facebook regarding whether mobile messaging platforms posed a legitimate threat to Facebook's core application. He recalled colleagues contemplating if messaging apps could "use that as a Trojan horse wedge to get into the social networking space."
Meta's concerns extended beyond WhatsApp becoming a direct competitor to those who might potentially acquire it. Olivan testified that Facebook was worried about Google or Apple purchasing WhatsApp. He described them as "particularly dangerous acquirers because they have an unfair advantage on us" through their control of underlying mobile operating systems.
Notably, Olivan acknowledged that Meta didn't have a plan for how to monetise Facebook when Zuckerberg started it and lacked a concrete revenue strategy for WhatsApp. "The plan was to figure it out down the line," he shared.
The Core of the case
The FTC's entire case hinges on its definition of the relevant market: "personal social networking services." The agency contends this represents a distinct market from other social platforms because it focuses primarily on connecting users with friends and family rather than interest-based communities or content consumption.
Meta has contested this market definition, arguing that it competes within a broader ecosystem of apps vying for user attention and advertising revenue.
The trial has featured testimony from executives at TikTok, Pinterest, Reddit, Strava, and X (formerly Twitter), all addressing whether these platforms compete in the same market as Facebook and Instagram.
Adam Presser, TikTok's head of operations and trust and safety, testified that TikTok doesn't view itself as competing with Meta for "personal social networking." He noted that only approximately 1% of time spent on TikTok occurs in its friends tab.
Similarly, Pinterest's former director of product management, Julia Roberts, considered Pinterest a "lifestyle" app rather than a social network. She testified that when users "come to Pinterest expecting it to be like other social media apps, they tend to be confused about how to use the product since people are not really forefront of the experience."
Meta’s advertising empire
While fighting this existential legal battle, Meta continues reporting impressive financial results. In April 2025, it announced first-quarter revenue of $42.31 billion, exceeding analysts' estimates, with profits of $6.43 per share, outperforming expectations of $5.28 per share.
These results stem from Meta's continued dominance in digital advertising, a market it now seeks to change through artificial intelligence. In a recent interview with Stratechery's Ben Thompson, Zuckerberg outlined an ambitious vision where AI could eventually manage the entire advertising process from end to end.
"We're going to get to a point where you're a business, you come to us, you tell us what your objective is, you connect to your bank account, you don't need any creative, you don't need any targeting demographic, you don't need any measurement, except to be able to read the results that we spit out," Zuckerberg explained.
This vision would enable the company to automatically generate photos and videos of a client's products, write compelling ad copy using AI, publish targeted advertisements, and measure their effectiveness, all without human intervention. If a particular ad performs well, the system would automatically multiply its reach and aggressively promote it, with customers encouraged to purchase the advertised products directly through Meta's platforms.
The company has already made progress toward this goal. In the most recent quarter, Meta implemented a new recommendation model for Reels that increased conversion rates by 5%, while more than 30% of Meta's advertising customers have begun utilising AI tools to develop creative content.
"In the last six months, improvements to our recommendation systems have led to a 7% increase in time spent on Facebook, a 6% increase on Instagram, and 35% on Threads," Zuckerberg reported during a recent earnings call.
To support these ambitious AI initiatives, Meta is investing in infrastructure development. The company recently increased its 2025 capital expenditure projections to between $64 billion and $72 billion.
While Meta executives maintain that the majority of this investment will support the company's core business operations, CFO Susan Li acknowledged that the increased spending reflects a strategic decision to "more rapidly ready data centre capacity in support of AI efforts."
Regulatory challenges
However, all these ambitions aren’t without challenges. The company faces increasing regulatory scrutiny across multiple continents, with the European Union's Digital Markets Act (DMA) imposing strict new obligations on "gatekeeper" platforms. Under these regulations, Meta must allow users to easily switch between competing services and limit its ability to combine user data across different platforms.
In February 2025, the European Commission fined Meta €1.2 billion ($1.3 billion) for violating DMA provisions related to user consent for cross-platform data sharing between Facebook and Instagram. It is appealing the decision while simultaneously implementing technical changes to comply with the regulatory requirements.
Meanwhile, in India, Meta's largest market by user count, the Competition Commission launched its investigation in March 2025 into the company's market practices, particularly focusing on WhatsApp's dominance in mobile messaging and its integration with other Meta services.
What's at stake?
The trial has revealed the lengths Meta is willing to go to defend its market position. The company has fought aggressively to counter the FTC's market definition, bringing executives from competing platforms to argue that the social media landscape is far more competitive than government regulators claim.
Meta has also attempted to show that its acquisitions benefited consumers by making Instagram and WhatsApp safer and more reliable. This claim was directly contradicted by Systrom's testimony that Instagram "didn't have Twitter's 'fail whale' problem" and was already effectively addressing spam and content filtering challenges before the acquisition.
As trial proceedings continue, evidence increasingly suggests that Zuckerberg built Meta's empire with a strategic intent to eliminate potential competitive threats. When asked if Zuckerberg restricted features that helped Instagram grow because "we were a threat to their growth," Systrom unequivocally confirmed this assessment.
If Judge Boasberg rules against the company, the subsequent remedy phase could result in the forced divestiture of Instagram and WhatsApp. Such a decision would not only dismantle Meta's digital empire but potentially create two powerful new competitors in the market.
Industry analysts estimate that Instagram alone could be valued at over $300 billion as an independent company, with WhatsApp potentially worth $100-150 billion. The combined value of these divested assets could exceed Meta's current total market capitalisation.
Regardless of the trial's outcome, Meta's ambitious plans for AI-powered advertising represent the company's strategic next frontier.
The irony is that even as regulators attempt to address Meta's allegedly monopolistic practices in social media, the company is leveraging that very market position to build what could become an even more powerful presence in the future of advertising technology. The question remains whether history will repeat itself, with regulators once again struggling to keep pace with the company’s empire-building ambitions.
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