The FTC scrambles to rescue its Meta break-up suit (2024)

First up is the Federal Trade Commission’s allegation that Facebook, as the company was called at the time, withheld information from the agency when the FTC was reviewing its acquisitions of Instagram in 2012 and WhatsApp in 2014.

Although it cleared the mergers, the FTC sued Meta in 2020 in an attempt to have them unwound. Meta is trying to have the suit thrown out, arguing that it’s invested billions in Instagram and WhatsApp and the antitrust agency hasn’t demonstrated how consumers are worse off. The FTC now claims that it had only undertaken a “limited review” of the deals when they happened “at Meta’s request,” and it “now has available vastly more evidence, including pre-acquisition documents Meta did not provide in 2012 and 2014.”

It’s not clear from the FTC’s filing what information Facebook allegedly withheld, though a spokesperson said that “some items noted in this filing are still under seal.”

These days, many regulators view their clearance of the Instagram and WhatsApp acquisitions with embarrassment, as they allowed Facebook to snuff out potential competition in the social networking market, leading to a situation today where it’s tricky for many people to avoid using a Meta property. If you want to know why Big Tech mergers are these days more likely than not to be blocked in the U.S. and EU, here’s the textbook reason.

That said, unwinding these mergers would be seismic stuff. It wouldn’t be entirely unprecedented, as U.K. competition regulators forced Meta to unwind its 2020 purchase of Giphy a couple years ago, but the GIF repository is small-fry compared to Insta and WhatsApp, and a lot more time has passed since those deals went through. Indeed, even when the EU’s antitrust authorities fined Facebook $122 million in 2017 for giving them misleading information during the WhatsApp merger, that didn’t affect their approval of the deal as such.

So I’d be surprised if the FTC’s latest tactic manages to undo what was done a decade or more ago, no matter how naïve that approval may seem today. But it might at least stop the courts from throwing out the FTC’s suit before trial, which is what Meta is hoping will happen.

Meanwhile, back in Europe, the Italian antitrust authority today fined Meta €35 million ($38 million) for “unfair commercial practices.” Chump change, yes, but also yet another sign of how the antitrust and privacy regulation worlds are blurring into one another these days. Meta’s sin here was not properly informing people signing up for Instagram via the web that their personal data would be used for commercial purposes. Meta says it disagrees with the fine and is assessing its options.

Finally, stepping away from the world of antitrust, a former Meta engineer named Ferras Hamad has sued the company for discrimination and wrongful termination, relating to his February dismissal. According to Reuters, the Palestinian-American engineer says he was fired after “trying to help fix bugs” that suppressed Palestinian Instagram posts. Hamad also claims that employees using internal communications systems to mention the deaths of their relatives in Gaza found their messages deleted, and also that Meta investigated workers for using the Palestinian flag emoji, but not the emojis for the Israeli or Ukrainian flags.

This is by no means the first time that Meta faces allegations of censoring staffers when they try to speak out in support of Palestinians, in the context of the Israel-Gaza war. Last month, around 200 Meta employees wrote to CEO Mark Zuckerberg last month to decry the alleged practice, and human rights groups held coordinated online protests to back them up. Meta has not yet commented on Hamad’s suit.

More news below.

David Meyer

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NEWSWORTHY

Google antitrust class action. U.K. judges have decided to allow a class action lawsuit against Google to go ahead, Bloomberg reports. In the suit, thousands of British businesses allege that Google illegally abused its dominance in the advertising technology sector to give preference to its own ad services. As we have written before, Google already faces EU antitrust charges, and has also been fined $268 million in France, over similar claims.

Google privacy chief departs. Keith Enright, Google’s longstanding chief privacy officer, is leaving and won’t be replaced, Forbes reports. Competition law chief Matthew Bye is also saying, er, goodbye—and again, his post will not be filled. Google promises to “continue to establish and maintain advanced privacy and data protection controls for our services, with input from our dedicated legal and product privacy teams, as well as hundreds of people across the company.”

AI-pocalypse yesterday. OpenAI’s ChatGPT, Anthropic’s Claude, and Perplexity all went down for a while yesterday, with some also reporting a brief outage at Google’s Gemini. As TechCrunch reports, it’s unusual to see so many AI chatbot providers taking a dip at the same time, though it may be that the ChatGPT outage flooded the others with traffic that also caused trouble there. In other AI news, some former employees of OpenAI, Google DeepMind and Anthropic have written a public letter asking that advanced AI companies promise not to enforce non-disparagement agreements, so whistleblowers can speak out on AI safety in the absence of proper AI regulation.

ON OUR FEED

“Elon Musk, from the beginning of his endeavor with Twitter, I think he lacks some understanding of why we in the EU are so careful or cautious when we see the first seeds of something that might grow bigger, because of the history in the previous century where the first signs of antisemitism were not stopped.”

—Vera Jourova, the EU commissioner in charge of values and transparency, tells the Guardian that Musk simply doesn’t grok the anti-disinformation rules X needs to follow under the EU’s Digital Services Act. She said X’s “community notes” approach to moderation, which involves users correcting other users, doesn’t replace the need for expert fact-checking. Her words suggest X could end up with a fat DSA fine.

IN CASE YOU MISSED IT

Elon Musk can’t just ask ‘his brother and his besties’ at Tesla to pay him $46 billion, NYC comptroller says, by Amanda Gerut

Elon Musk admits diverting Tesla’s AI chips to his other companies, claiming ‘they would have just sat in a warehouse’, by Christiaan Hetzner

TikTok says it’s fighting off a cyberattack targeting CNN and other ‘high-profile accounts’, by the Associated Press

Meta is testing unskippable ads in the Instagram feed, by Chris Morris

What a study of AI copilots for lawyers says about the future of AI for everyone, by Jeremy Kahn

With $30 billion in lost market value and big shoes to fill, Snowflake’s new CEO bets big on AI—and on big friends like Nvidia’s Jensen Huang, by Sharon Goldman

Bill Gates says he was a ‘misfit’ as a kid who clashed with his parents and almost got kicked out of college, in upcoming autobiography, by Eleanor Pringle

BEFORE YOU GO

AI news. The U.S.’s most downloaded news app has, it turns out, been producing absolute balderdash with the use of AI. As Reuters reports, China-owned NewsBreak has stepped into the gap left by closure of many local news operations, licensing content from the likes of Reuters and CNN and also using AI to rewrite local news and press releases. But its algorithms apparently get things horribly wrong at times, reporting a shooting that never happened, and giving incorrect details about community programs. NewsBreak has also had to settle multiple copyright lawsuits over its rewriting of other outlets’ articles.