instagram – Attorney Evan Brown

November 15, 2024 Antitrust, Social Media

Meta faces antitrust trial: FTC’s case against Instagram and WhatsApp acquisitions moves forward

The Federal Trade Commission (FTC) is taking Facebook’s parent company, Meta Platforms, to task over allegations that Meta’s acquisitions of Instagram in 2012 and WhatsApp in 2014 were anticompetitive. A recent ruling in the case allowed the FTC’s key claims to proceed, marking a significant step in the government’s effort to curtail what it alleges is Meta’s illegal monopoly over personal social networking (PSN) services. While some parts of the case were dismissed, the trial will focus on whether Meta’s past actions stifled competition and harmed consumers.

The FTC’s claims: Crushing competition through acquisitions

The FTC contended that Meta acted unlawfully to maintain its dominance in social networking by acquiring Instagram in 2012 and WhatsApp in 2014 to neutralize emerging competition. According to the agency, Instagram’s rapid rise as a mobile-first photo-sharing platform posed a direct threat to Meta’s efforts to establish a strong presence in the mobile space, where its applications were underperforming. WhatsApp, the FTC argued, was a leader in mobile messaging and had potential to expand into personal social networking, making it another significant competitive threat. The FTC alleged that Meta purchased these companies not to innovate but to eliminate rivals and consolidate its monopoly.

The case reached this stage after Meta filed a motion for summary judgment, seeking to have the case dismissed without trial. Meta argued that the FTC’s claims lacked sufficient evidence to support its allegations and that the acquisitions benefited consumers and competition. The court denied Meta’s motion in large part, finding that substantial factual disputes existed about whether the acquisitions were anticompetitive. The court determined that the FTC had presented enough evidence to show that Instagram and WhatsApp were either actual or nascent competitors when acquired.

The court’s analysis highlighted internal Meta documents and statements from CEO Mark Zuckerberg as particularly persuasive. These documents revealed that Instagram’s growth was a source of concern at Meta and that WhatsApp’s trajectory as a mobile messaging service could have positioned it as a future competitor. Based on this evidence, the court ruled that the FTC’s claims about the acquisitions merited a trial to determine whether they violated antitrust laws.

However, the court dismissed another FTC claim alleging that Meta unlawfully restricted third-party app developers’ access to its platform unless they agreed not to compete with Facebook’s core services. The court found that this specific allegation lacked sufficient evidence to proceed, narrowing the scope of the trial to focus on the acquisitions of Instagram and WhatsApp.

Meta’s defenses and their limitations

Meta of course pushed back against the FTC’s case, arguing that its acquisitions ultimately benefited consumers and competition. It claimed Instagram and WhatsApp have thrived under Meta’s ownership due to investments in infrastructure, innovation, and features that the platforms could not have achieved independently. Meta also contended that the FTC’s definition of the market for personal social networking services was too narrow, ignoring competition from platforms such as TikTok, YouTube, LinkedIn, and X.

However, the court rejected some of Meta’s defenses outright. For example, Meta was barred from arguing that its acquisition of WhatsApp was justified by the need to strengthen its position against Apple and Google. The court found this rationale irrelevant to the antitrust claims and insufficient as a defense. Meta’s arguments about broader market competition will be tested at trial, but the court found enough evidence to support the FTC’s narrower focus on personal social networking services.

Three Reasons Why This Case Matters:

Defining Market Boundaries: The case could set new standards for how courts define markets in the tech industry, particularly when dealing with overlapping functionalities of platforms such as social media and messaging apps.
Reining in Big Tech: A trial outcome in favor of the FTC could embolden regulators to pursue other tech giants and challenge long-standing business practices.
Consumer Protection: The case highlights the tension between innovation and market power, raising questions about whether tech consolidation truly benefits consumers or stifles competition.

Case Citation

Federal Trade Commission v. Meta Platforms, Inc., Slip Copy, 2024 WL 4772423 (D.D.C. Nov. 13, 2024).

December 20, 2022 Trademarks

Does tagging the wrong account in an Instagram post show actual confusion in trademark litigation?

In a recent trademark infringement case, the court considered whether Instagram users tagging photos of one product with the account of another company’s product was evidence of actual confusion. In this case, the court found that it was not evidence of actual confusion.

Plaintiff makes premium tequila sold in bottles and defendant makes inexpensive tequila-soda product sold in cans. Plaintiff sued defendant for trademark infringement and sought a preliminary injunction against defendant. To support its assertion that it was likely to succeed on the merits of the case, plaintiff argued there was actual confusion among the consuming public. For example, on Instagram, at least 30 people had tagged photos of plaintiff’s products with defendant’s account.

The court found that in these circumstances, particularly where a marketing survey also showed less than 10% of people were confused by the defendant’s mark, that the incorrect tagging did not show actual confusion.

Though the bar for showing actual confusion is low, the court noted that a showing of confusion requires more than a “fleeting mix-up of names” and that confusion must be caused by the trademark used and must “sway” consumer purchase.

In this case, the court found that defendant’s evidence regarding mistaken Instagram tags did not establish a likelihood of trademark confusion that would result in purchase decisions based on the mistaken belief that the defendant’s tequila-soda product was affiliated with the plaintiff. At best, in the court’s view, the plaintiff’s evidence demonstrated a “fleeting mix-up of names,” which was not evidence of actual confusion.

The court likened this case to the recent case of Reply All Corp. v. Gimlet Media, LLC, 843 F. App’x 392 (2d Cir. 2021), wherein “instances of general mistake or inadvertence—without more—[did] not suggest that those potential consumers in any way confused [plaintiff’s] and [defendant’s] products, let alone that there was confusion that could lead to a diversion of sales, damage to goodwill, or loss of control over reputation.”

Casa Tradición S.A. de C.V. v. Casa Azul Spirits, LLC, 2022 WL 17811396 (S.D. Texas, December 19, 2022)

April 16, 2020 Copyright

Instagram’s terms of service gave ability to embed photo

Embedding Instagram photos on website not infringement — Be sure to follow @internetcases on Instagram.

Plaintiff – a professional photographer – sued website Mashable and Mashable’s owner after the website used HTML Instagram provides to embed one of plaintiff’s photos on Mashable. Defendants moved to dismiss, claiming they had rights to embed the photo under Instagram’s terms of service. The court agreed and dismissed the copyright infringement claim. Embedding Instagram photos on the website was not infringement.

Mashable embedded anyway

Before the dispute began, Mashable had first tried getting a license from plaintiff to use one of her photographs is a story about female photographers. It offered plaintiff $50 for the rights, but plaintiff refused. A few days later, Mashable used Instagram’s embed code to display the image on Mashable anyway.

Was this a server test question?

The embed code on Mashable caused the image to appear when one would visit the Mashable page by pulling the image data off of the Instagram server. Other cases have referred to this and similar technologies as “inline linking”. Almost 13 years ago, in the case of Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146 (9th Cir. 2007), the Ninth Circuit indicated strongly that inline linking did not cause copyright infringement problems because the process did not involve making a copy of the image, but instead just called it from the original server. From this notion came the “server test” articulated in that case.

A few months before the Perfect 10 v. Amazon decision, a district court in Texas (in the case of Live Nation Motor Sports, Inc. v. Davis, 2006 WL 3616983 (N.D.Tex., December 11, 2006)) had stopped a website owner from pulling in audio data from another server and appearing to stream it from his website.

And just a couple of years ago, another court in the same district as this case involving Instagram declined to adopt the Ninth Circuit’s “server test,” instead finding that embedding an image of Tom Brady in a tweet on a website was an unauthorized infringement of that plaintiff photographer’s right under the Copyright Act to display the photo. See Goldman v. Breitbart News Network, LLC, 302 F.Supp.3d 585 (S.D.N.Y. 2018).

Embedding Instagram photos on website was not infringement because of license

Though the underlying conduct in this case was very similar to that in Goldman v. Breitbart, the court’s decision here did not even cite that opinion. And it did not need to because the legal basis on which it decided this case was different.

In this case, the court held that when plaintiff signed up for Instagram, she granted Instagram the right to allow others (via sublicensing) to embed photos that plaintiff uploaded and made publicly available. Even though plaintiff never directly authorized Mashable to use her photo, Mashable was granted rights via Instagram to embed the photo, Instagram having gotten the ability to grant those rights to Mashable from plaintiff when she agreed to Instagram’s terms of use.

The message for Instagram users – your photos may end up on websites

The simple message for users of Instagram (and there are a lot of them) is to be aware that by uploading photos to Instagram and making them publicly available, you are authorizing Instagram to let others display those photos on third party websites. Posting to Instagram and making photos publicly viewable is, quite possibly, posting them to be viewed by a much wider audience than the Instagram community. Under the rule of this case,
embedding Instagram photos on a website is not infringement.

Sinclair v. Ziff Davis, LLC 2020 WL 1847841 (S.D.N.Y., April 13, 2020)