Mar 21, 2022 - Technology

Meta's antitrust defense: Blizzard of subpoenas

Illustration of Meta’s logo wrapped around a gavel.
Illustration: Shoshana Gordon/Axios

Meta's plan to demand mountains of information from up to 286 rivals is bringing the company's defense strategy into view as the government presses a lawsuit to break it up.

State of play: Meta —the parent company for Facebook, Instagram and WhatsApp — could drag hundreds of competitors into its legal battle, aiming to slow the Federal Trade Commission's prosecution and "bury" its lawyers in paperwork, as one expert put it.

Catch up quick: A federal judge ruled in January the Federal Trade Commission could proceed with its revised case accusing Facebook of illegally buying competitors Instagram in 2012 and WhatsApp in 2014.

What's happening: Meta's opening salvo in what will be a lengthy discovery process takes aim at the FTC's argument that Snapchat is Facebook's main competitor.

  • Meta told the judge it may subpoena up to 286 firms it has identified as having information relevant to the case — most of which have named Facebook as a competitor in public statements.
  • Meta says the list includes companies that compete with it for user time and attention and advertising dollars, including companies that offer services like messaging, news and other media, streaming video, and gaming.
  • The company has served more than 90 subpoenas so far to third parties.

The intrigue: Companies including LinkedIn, Snap and Pinterest are fighting back, accusing Meta in a court filing of "casting an extraordinarily wide net for extremely sensitive materials."

  • The companies want to limit Meta's in-house attorneys' access to the information, which includes product pricing determinations, strategic plans, and potential acquisitions since Jan. 2010.
  • "A key theme in the FTC’s complaint is that Meta has used data to compete unfairly, " the companies said. "In a lawsuit that alleges Meta misused data, Meta’s subpoenas create a dangerous risk of further misuse."

The other side: Meta previously acknowledged the companies are unlikely to want to hand over details about their businesses, telling the judge the companies "may be resistant" but the information is vital.

  • "Meta will need this extensive discovery to demonstrate that the FTC’s alleged relevant antitrust market improperly excludes many competitive alternatives," the company wrote in a filing.
  • "Meta will also need discovery from these companies relating to their privacy, data protection, and advertising policies and practices, among others, to defend against the FTC’s unsupportable allegations that consumers would have had better or higher-quality products in these and possibly other respects absent the challenged acquisitions of Instagram and WhatsApp."

What they're saying: "I never in my career have seen a case where 200 some-odd companies have been subpoenaed," Joel Mitnick, an antitrust attorney with Cadwalader, Wickersham & Taft and former FTC trial lawyer, told Axios.

  • "It is just by an order of magnitude larger than anything in my experience. So I think it is extremely unusual."
  • It's a high number, but not surprising given the breadth and complexity of the litigation, a former senior antitrust official told Axios. "The strategy is to muddy up the FTC’s arguments as much as possible."

Between the lines: The sheer number of companies makes a strategic point, Mitnick said, as well as reveals a litigation strategy.

  • "They're going to be burying the FTC legal staff in paperwork," Mitnick said.
  • Both delaying trial and overwhelming the government with documents is a common tactic in many legal battles, including antitrust.

The big picture: The FTC lawsuit poses an unprecedented threat against Meta, with regulators raising the possibility of unwinding its Instagram and WhatsApp acquisitions.

  • But the lengthy timeline for the case could prove favorable to Facebook as the years-old transactions get even older and the rest of the tech world zips along with new acquisitions.

What's next: The judge in the case refused to set a trial date because of the long discovery process — scheduled to last until January 2024.

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