Sep 21, 2022 - Technology

Meta: We’re not-so-big tech now

Illustration of a small Meta logo under a magnifying glass surrounded by a larger, out of focus version

Illustration: Sarah Grillo/Axios

As Meta shapes its antitrust defense, it has begun pointing out its plummeting stock price as a sign that competition is alive and well in its market.

Driving the news: Meta’s market value is down by more than 60% since the spring. It has lost ground to its surging rival TikTok, and its revenue has been curtailed by Apple's iOS privacy changes.

  • During a hearing Monday on the future of a lawsuit brought against Meta by a group of states, Aaron Panner, the attorney representing Facebook, noted the exploding popularity of TikTok and other social media platforms and said, per Reuters: "Sometimes facts that are good for an antitrust defense are bad for business."

Meta's arguments imply that the company is simply no longer a colossus deserving so much government scrutiny and lawsuits over what regulators describe as its monopoly.

Why it matters: Most companies do everything they can to tell stories of growth and market dominance, but as Meta faces antitrust action by the Federal Trade Commission, the EU and U.S. states, the company is finding it useful to underscore its weakness.

By the numbers: Apple, Microsoft, Amazon and Google are each worth more than $1 trillion. Meta is now worth less than half that.

  • Apple, Microsoft, Amazon and Google are all currently in the top five companies globally by market cap. Meta sits around number 10.
  • TikTok was once again the most downloaded app globally last quarter, a position it's held for 8 quarters in a row, per Sensor Tower, an apps analytics firm. Meta keeps introducing changes to Facebook and Instagram to make them more like TikTok.

What they're saying: "The fact we compete with companies that are many times our size and have vast resources beyond ours is not lost on us," a Meta spokesperson told Axios. "We’re acutely aware that, despite the economic evidence of a hyper-competitive landscape, some regulators and politicians seem convinced that Meta has a monopoly."

  • In addition to highlighting its struggles to compete with TikTok on Capitol Hill and in earnings reports, Meta has blamed Apple's App Tracking Transparency feature, which lets iPhone users opt out of tracking for targeted advertising, for billions of dollars of lost digital advertising revenue.

Yes, but: Despite taking some major hits, Meta has 2.9 billion monthly active users and had net income of $6.7 billion on $29 billion revenue last quarter. It's still buying other companies. Its global influence over information and advertising remains vast.

The big picture: The FTC has sued Meta over its past acquisitions of WhatsApp and Instagram and recently filed suit to stop the company from buying VR fitness company Within.

  • Abroad, Meta is fighting antitrust authorities in Germany, the EU and the U.K., in cases that look at Facebook Marketplace, digital advertising and the role of data.
  • Meta has argued that its purchase of Instagram and WhatsApp a decade ago benefitted users and that it helped grow the two companies in ways that would have been impossible without its resources. It says its acquisition of Within will significantly boost adoption and innovation in the fitness VR market.

The other side: "[The FTC and the Europeans] will say, 'We're not going after Meta because of market cap, we care about other exercising of monopoly power in social networking," Alden Abbott, former FTC general counsel, told Axios.

  • "The scrutiny that Meta faces is of its own doing, resulting from the company's aggressive business practices and track record of misrepresenting how its products operate," Jared Holt, senior research manager at the Institute for Strategic Dialogue, told Axios.
  • "Though Facebook is starting to recede in popularity among some demographics, it and other products in Meta's portfolio remain dominant and important platforms around the globe," Holt said.
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