FTC Sues Facebook for Illegal Monopolization Through Instagram and WhatsApp Acquisitions, Seeks Breakup

The Federal Trade Commission, joined by 46 states, the District of Columbia, and Guam, files major antitrust lawsuit against Facebook alleging illegal monopolization through systematic acquisition of competitors Instagram and WhatsApp. The FTC seeks structural breakup of Facebook through forced divestiture, documenting the company’s “buy or bury” strategy to eliminate competitive threats through acquisition rather than competition.

Systematic Monopolization Through Acquisition

The FTC’s December 9, 2020 complaint alleges that Facebook engaged in a systematic strategy to eliminate threats to its monopoly in personal social networking through anticompetitive acquisitions, most notably the 2012 purchase of Instagram for $1 billion and the 2014 acquisition of WhatsApp for $19 billion. The lawsuit documents that these acquisitions were not driven by business synergies or consumer benefits but by deliberate intent to neutralize competitive threats before they could challenge Facebook’s dominant position.

Internal Facebook documents obtained by the FTC reveal explicit monopolization intent. Mark Zuckerberg’s communications show he viewed Instagram and WhatsApp as existential competitive threats that needed to be eliminated through acquisition. Zuckerberg’s emails describe the acquisitions using language like “neutralizing a potential competitor” rather than expanding services or creating value for users - direct evidence of anticompetitive intent that would later be characterized as Facebook’s “buy or bury” strategy.

The FTC complaint argues that Facebook maintained monopoly power in the U.S. personal social networking market through a multi-year course of unlawful conduct. Rather than compete on the merits by improving its services, Facebook used its dominant position and deep financial resources to systematically acquire companies that posed competitive threats, creating insurmountable barriers to entry for future competitors and denying consumers the benefits of competition including better privacy protections, improved service quality, and real innovation.

The “Kill Zone” Strategy and Regulatory Failure

The lawsuit documents what became known as Facebook’s “kill zone” strategy - creating an environment where potential competitors knew they would either be acquired by Facebook or crushed through anticompetitive practices, making venture capital investment in Facebook competitors essentially impossible. This strategy transformed the entire social networking market, with entrepreneurs and investors understanding that building competitors to Facebook was futile because the company would simply acquire successful startups before they could achieve significant scale.

The FTC’s case emphasized the Commission’s own regulatory failure: it had approved both the Instagram and WhatsApp acquisitions when they occurred, failing to recognize or act on the obvious anticompetitive implications. The Instagram acquisition in 2012 received FTC approval with minimal scrutiny despite Facebook’s dominant market position. The WhatsApp acquisition in 2014 was approved with only privacy-focused warnings rather than antitrust conditions, even though the $19 billion price tag clearly signaled Facebook’s willingness to pay almost any price to eliminate a competitive threat.

This retroactive challenge to previously approved mergers was unprecedented and legally risky, but the FTC argued it was necessary because Facebook had systematically deceived regulators about its intentions and market power. The Commission’s complaint acknowledged implicitly that its earlier approval decisions represented regulatory capture - Facebook had successfully concealed anticompetitive intent from regulators while executing a systematic monopolization strategy through mergers.

Requested Structural Remedies and Divestiture

The FTC sought extraordinary structural remedies including a permanent injunction requiring Facebook to divest Instagram and WhatsApp - essentially breaking up the company by forcing it to spin off its two major acquisitions. This divestiture request represented the most aggressive antitrust enforcement action against a tech platform in decades, seeking to structurally separate Facebook’s properties rather than simply imposing behavioral conditions or fines.

The complaint also requested prohibitions on Facebook imposing anticompetitive conditions on software developers and requirements for prior FTC notice and approval of future mergers and acquisitions. These behavioral remedies would prevent Facebook from using its platform dominance to disadvantage competitors or using acquisition strategies to maintain monopoly power in the future.

The divestiture request acknowledged that monetary penalties alone were insufficient for monopolization at this scale - Facebook had demonstrated willingness to pay any fine as a cost of maintaining monopoly power, as shown by the $5 billion FTC settlement in 2019 that Facebook’s stock price celebrated. Structural separation through divestiture was necessary to restore competition that Facebook had systematically eliminated through anticompetitive acquisitions.

Coalition of State Attorneys General

The breadth of the lawsuit was remarkable: 46 states, the District of Columbia, and Guam joined the FTC’s action, demonstrating bipartisan recognition of Facebook’s monopoly power and anticompetitive conduct. State attorneys general from both Republican and Democratic administrations agreed that Facebook had engaged in illegal monopolization warranting structural breakup, a rare moment of political consensus on tech platform regulation.

The state participation added significant legal and political weight to the federal action. State attorneys general brought independent legal authority under state antitrust laws and represented consumer harm occurring within their jurisdictions. The coalition demonstrated that Facebook’s monopoly power was not a partisan issue but a fundamental competition problem recognized across the political spectrum.

Several states filed separate but coordinated complaints documenting state-specific harms from Facebook’s monopolization. These complaints emphasized how Facebook’s elimination of competitors had harmed consumers through reduced privacy protections, diminished service quality, eliminated innovation, and foreclosed market entry by new competitors that might have offered better products.

Legal Challenges and Ongoing Battle

Facebook immediately moved to dismiss the FTC’s complaint, arguing that the Commission was attempting to retroactively challenge mergers it had approved years earlier and that the FTC lacked evidence of current anticompetitive harm. On June 28, 2021, U.S. District Judge James Boasberg dismissed the FTC’s complaint as “legally insufficient,” finding that the Commission had failed to adequately plead that Facebook held monopoly power in a properly defined market.

The dismissal was a major setback but not fatal. The FTC filed an amended complaint with additional evidence and more precise market definitions. Judge Boasberg allowed the amended complaint to proceed, and after years of discovery producing millions of internal Facebook documents, the case was scheduled for trial beginning April 14, 2025.

The prolonged legal battle demonstrates both the difficulty of antitrust enforcement against tech platforms and Facebook’s resources to fight government prosecution. The company deployed armies of lawyers and economists to challenge every aspect of the FTC’s case, turning what should have been straightforward monopolization prosecution into years of procedural warfare designed to delay or prevent structural remedies.

Significance for Tech Platform Accountability

The FTC lawsuit represents the most significant antitrust challenge to tech platform power in the modern era. Unlike earlier cases focused on narrow anticompetitive practices, the Facebook case seeks fundamental structural change through forced divestiture - recognition that behavioral remedies have proven insufficient to address monopoly power achieved through systematic acquisition of competitors.

The case’s outcome will determine whether the United States can effectively address tech platform monopolization or whether companies like Facebook have become too large and politically powerful to face structural accountability. Facebook’s market capitalization exceeding $1 trillion by 2021 gave it resources to mount indefinite legal defense, while its control over core communications infrastructure gave it leverage over political actors who might support aggressive antitrust enforcement.

The lawsuit also exposed the consequences of decades of permissive merger enforcement. The FTC’s approval of Instagram and WhatsApp acquisitions without structural conditions allowed Facebook to consolidate monopoly power that would require years of litigation to potentially unwind. The case demonstrates that preventing monopolization through merger review is far more effective than attempting to break up monopolies after they’ve been permitted to form through regulatory failure.

As of late 2024, the case remained in active litigation with trial scheduled for 2025. Facebook continues operating as an integrated company controlling Instagram, WhatsApp, and Facebook’s core platform with over 3 billion combined users. Whether the FTC will succeed in forcing structural breakup remains uncertain, but the lawsuit has established a legal and factual record documenting Facebook’s systematic monopolization through anticompetitive acquisitions - evidence that will shape tech antitrust enforcement for decades regardless of the ultimate judicial outcome.