Why FTC and US state antitrust suits probably won’t impact Facebook’s ad business

How might the FTC’s antitrust lawsuit against Facebook impact advertiser media plans?

Not much at all — at least in the short term. 

On Wednesday, the FTC accused Facebook of trying to “entrench and maintain its monopoly and deny consumers the benefits of competition” through its acquisition of Instagram and WhatsApp, and announced an “aim is to roll back Facebook’s anticompetitive conduct and restore competition so that innovation and free competition can thrive” — potentially by unwinding those acquisitions.

But making the case for antitrust violation could be tough for a few reasons — and may not be the fix advertisers are looking for, nor the silver bullet to Facebook’s privacy problems. 

A long shot

Despite the implications of unwinding Facebook’s properties, ad buyers are not expecting any major or immediate changes based on the FTC’s announcement. 

First off, antitrust lawsuits take a long time to play out, one media agency executive told Campaign US. Just look at the Microsoft and AT&T antitrust cases, which dragged on over the course of several years.

Second, the FTC’s case is difficult to make, given that the agency approved Facebook’s acquisitions of both Instagram and WhatsApp. Facebook’s lawyers have already pointed out that contradiction. 

“The government now wants a do-over, sending a chilling warning to American business that no sale is ever final,” Facebook VP and general counsel Jennifer Newstead said in a statement in response to the case.

As for a monopoly case, it’s hard to prove that there aren’t viable alternative social platforms in the market. Twitter, Snapchat, Pinterest and TikTok aren’t quite as big as Facebook, but they’re scaled. Users spent similar time on Instagram and Twitter — 748 million hours and 618 million hours, respectively — in October, according to Nielsen.  

If the FTC were able to make the case to break up Facebook despite these complications, it would be faced with a challenge of setting precedent. How might a decision to unwind WhatsApp, for example, impact Salesforce’s recent $28 billion acquisition of Slack?

“Facebook will say ‘if you do this to us, are you creating a can of worms for any company that has diversified beyond a single vertical?’” said Oscar Garza, managing partner at GroupM. 

Contradictions and technicalities 

The FTC’s suit also seemingly runs counter to the $5 billion fine the agency issued against Facebook last summer for violating privacy law during the Cambridge Analytica scandal. 

In that ruling, Facebook was castigated for being too open with its APIs — which, on its face, is difficult to reconcile with the argument that Facebook is too closed off with its user data and needs to be broken up to oxygenate the market. 

Sophisticated media buyers understand that there are nuances to this, and privacy and antitrust are not inherently conflicted. Facebook can make its data available across other platforms if it does so in aggregate, without violating privacy law, GroupM’s Garza said. 

“Anybody who touches data in this business is well-read on GDPR, COPPA and CCPA,” he noted. “If we can balance it, Facebook can.”

Because the issues are so complex, the FTC will need a technical solution to get to the heart of Facebook’s dominance that might not be as blunt or attention-grabbing as a big break-up.

When Microsoft was investigated by the DOJ, for example, it was forced to make its APIs public. The FTC could similarly mandate Facebook to share its social graph for public use in a privacy-safe way, force Facebook to open up its algorithm to outside developers or make it illegal for Facebook to use data across its platforms, breaking up its scale.

“Privacy is the angle it is going to be forced to make changes [to],” said Shamsul Choudhury, VP of paid social at Jellyfish. “There’s a lot of concern about, where does data live and get shared?” 

Either way, the FTC’s case likely won’t impact how advertisers spend, given that the same users will be flocking to Instagram, WhatsApp and Facebook, regardless of who owns it.

“It doesn't change much from a plan allocation standpoint,” Garza said. 

Choudhury added: “As long as platforms deliver results, advertisers will continue to spend.”