Magnificent Seven stock Meta Platforms (NASDAQ:META) constantly has headlines swirling around it. Three analysts downgraded the stock in April, and shares are down big-time on tariff worries. However, in other big news, Meta is looking for help from President Trump to avoid a massive legal battle on the horizon.
Meta is set to engage in an antitrust trial with the Federal Trade Commission (FTC) on Apr. 14. The stakes for the company couldn’t be higher. The trial could result in a significant breakup of the company, forcing Meta to get rid of its WhatsApp and Instagram platforms.
As first reported by the Wall Street Journal (WSJ), Meta is trying to curry favor with President Trump to address this issue. Chief Executive Officer (CEO) Mark Zuckerberg wants to reach a settlement with the White House that could stop the trial.
The analysis below will explain why this trial is so important to the tech company and discuss its details and possible outcomes.
Understanding Instagram and WhatsApp: Meta’s Key Assets
The importance of this trial lies at the heart and soul of Meta’s business. Meta is an advertising company above all else. It makes money from selling ads, which it shows to the billions of people who use its Family of Apps. Meta’s Family of Apps includes Facebook, Instagram, Facebook Messenger, Threads, and WhatsApp. One reason Meta has been able to amass such a successful advertising business is due to its massive number of users on these platforms. Meta has 3.35 billion daily active people (DAP) on these apps.
Meta doesn’t say how many users it attributed to each app, and third-party data DAP is hard to come by. However, data from Statista estimates that Instagram and WhatsApp each have two billion monthly active users. This compares to Facebook's just under 3.1 billion. Although imperfect, these figures show that Instagram and WhatsApp make up a huge amount of Meta’s user base.
In terms of revenue, Instagram is notably much more important to Meta than WhatsApp. Using data from Business of Apps, Instagram accounted for around 41% of Meta’s total revenue versus just over 1% for WhatsApp.
If Meta were no longer able to own these apps, it would create a massive effect on the company’s advertising business. Sure, Meta could sell them for billions, but it would certainly rather keep them due to the growth they help generate and the strategic advantages they provide.
Meta vs. the FTC: Regulators Claim Anticompetitive Practices
The main argument of the trial is that Meta bought up its burgeoning competitors, Instagram and WhatsApp, over the years to stifle competition. Meta bought Instagram in 2012 for $1 billion and WhatsApp in 2014 for $19 billion. The FTC accuses Meta of using a “buy or bury” scheme. This implies that Meta bought these firms simply to stop them from competing with it rather than to grow them.
The Financial Times (FT) points out Meta’s expected arguments against this. It will look to argue the opposite of what the FTC is accusing, proving that it grew these platforms rather than sent them to die.
Meta has a very solid case to make in this respect. Business of Apps estimates that Instagram’s revenues sit at just under $67 billion. In 2015, that figure was less than $500 million. From 2018 to 2024, Business of Apps estimates that WhatsApp revenues increased from $443 million to nearly $1.8 billion. Both cases show evidence of massive growth.
FT notes that the judge in this case, James Boasberg, “has been skeptical about the FTC’s arguments” in the past. He initially dismissed the case in 2021. However, after the FTC amended the complaint, he allowed it to proceed. Boasberg said, “The FTC has put forward evidence sufficient for a reasonable factfinder to rule in its favor."
Meta Has a Fighting Chance, Even If Trump Can’t Come to the Rescue
Overall, it is unclear how much influence Trump could have over this suit. The FTC is an independent agency; the President is not supposed to influence it. Given that the trial is less than a week away, it seems likely to proceed. The WSJ points out that FTC Chairman Andrew Ferguson “has been an outspoken critic of Big Tech companies."
However, antitrust expert Joseph V. Coniglio says that the growth of Instagram and WhatsApp “strongly weigh toward a final decision in the company’s favor." For investors, this is a highly important case to keep an eye on.