Meta tries to settle antitrust case but FTC laughs it off

#304: Zuck is sent packing as the political undercurrents that have landed him in court to face break-up begin to surface...

Let’s kick off today with an important ICYMI.

For the past few weeks, Mark Zuckerberg has tried to cajole President Donald Trump to drop the Federal Trade Commission’s landmark break-up trial.

Now, a cracking scoop by Dana Mattioli, Rebecca Ballhaus and Josh Dawsey at The Wall Street Journal has revealed just how cack-handed and tone deaf his plea was.

A fortnight ago, Zuck called the new head of the FTC Andrew Ferguson and offered him $450 million to settle.

Meta’s internal view was that the FTC case was flimsy and buying a Get Out of Trial Free card would be good for everyone and keep Zuck out of the dock.

It will have been a rude shock then when the FTC demanded $18 billion to even think about it. Then within hours, doubled its ask to $30 billion.

That’s 67 times more than Zuck had offered, and any settlement would also come with a sheaf of requirements, changes and small print.

Meta had made a historic misjudgement, because it had missed the politics.

Meta paid $20 billion for Instagram and WhatsApp - the two deals that led to the trial. $450 million was taking the pissoir, and it didn’t go down well at The White House.

The Journal had the details.

On the call, Zuckerberg sounded confident that President Trump would back him up with the FTC, said people familiar with the matter.

The billionaire Facebook co-founder had been developing closer ties to Trump - his company donated $1 million to Trump’s inauguration and settled a $25 million lawsuit - and had been pressing the President in recent weeks to intervene in the monopoly lawsuit.

Only…

FTC chairman Andrew Ferguson found the offer not credible and wasn’t ready to settle for anything less than $18 billion and a consent decree.

As the trial approached, Meta upped its offer to close to $1 billion, the people said, and Zuckerberg led a frenzied lobbying effort to avoid the FTC trial.

It wasn’t enough. On Monday, the trial kicked off. The FTC called Zuckerberg - who privately expressed reluctance about taking the stand - to testify for four hours.

FYI: A consent decree is when a company pays its way out of a court case but must in return change its behaviour, face third party audits, and otherwise be tied up in tape.

Aw shucks. It couldn’t happen to a nicer monopolist.

The Journal went to former FTC chair Lina Khan, the person Big Tech fears most, for her thoughts on the debacle. Zuck’s “delusional”, she said.

“Mark bought his way out of competing, so I’m not surprised that he thinks he can buy his way out of law enforcement, too.

“His proposed remedy, like his market strategy, is: Let my illegal monopoly keep monopolizing.”

The WSJ’s story is so rich in facts and irony, I won’t cover it all, other than to urge you to do yourself a favour and read it yourself. Hat tip. Top notch journalism.

But I will just add this...

Days after the debacle - and on the first day of the trial - the FTC’s fresh-faced leader Ferguson gave an interview to Fox Business to reveal the politics behind the break-up.

He told the host that Meta’s acquisitions of Instagram and WhatsApp had given the company “a tremendous amount of power, power we all saw on full display in 2020”.

He was referring to the Right’s belief that Meta helped President Joe Biden get elected.

“And so that’s what this case is about, is about addressing the power of Meta and making sure that the situation we had in 2020 can never arise again.”

TL;DR: Meta has 3.35 billion. daily active users so it has the power to keep or sweep Presidents from power. Watch this and tell me I’m wrong…

THAT☝️ is why the Trump White House won’t let Zuck and Meta off the regulatory hook.

Phew… what a kick off to day three of the trial that threatens to break-up Meta and force it to let go of Instagram (half its ad revenue) and WhatsApp (two thirds of its audience).

Tally ho ladies and gentlemen, let’s get into it…

Welcome to new subs overnight from global ad giant OMD and creative agency Citizenracecar in New York (I’ll be there next month for the INMA World Congress), Apple in Cupertino, the board of ad giants Initiative in Mexico, and Australia’s Pinstripe Media, among many others. You are now part of a 16,000-strong movement of execs and leaders across more than 1,000 of the largest news, marketing and tech companies in the world seeking change.

I’m also speaking at The PPA Festival in London next month. If you’re in town, don’t miss this essential event for publishers, editorial brands, and information providers.

Join the PPA on Wednesday May 7 for a day of actionable insights, real-world examples, and unparalleled networking opportunities.

Connect, learn, and stay ahead in an ever-evolving industry. Across four stages, more than 100 speakers cover every facet of publishing, from data-driven growth to AI.

Hear from me and trailblazers including The New York Times, Vogue, The New Scientist, The Economist, and more. More details.

Let’s get to the future better, starting with day three of the Meta trial, starting with Meta’s now thinks it’s a publisher…