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To defeat FTC lawsuit, Meta demands 100+ rivals share biggest trade secrets


To defeat FTC lawsuit, Meta demands 100+ rivals share biggest trade secrets

Several years after Facebook-owner Meta acquired WhatsApp and Instagram, the Federal Trade Commission launched an antitrust lawsuit that claimed that through these acquisitions, Meta had become a monopoly. A titan wielding enormous fortune over smaller companies, the FTC said Meta began buying or burying competitors in efforts that allegedly blocked rivals from offering better-quality products to consumers. In this outsize role, Meta stopped evolving consumer preferences for features like greater privacy options and stronger data protection from becoming the norm, the FTC claimed. The only solution the FTC could see? Ask a federal court to help them break up Meta and undo the damage the FTC did not foresee when it approved Meta’s acquisitions initially.

To investigate whether Meta truly possesses monopolistic power, both Meta and the FTC have subpoenaed more than 100 Meta competitors each. Both hope to clearly define in court how much Meta dominates the market and just how negatively that impacts its competitors.

Through 132 subpoenas so far, Meta is on a mission to defend itself, claiming it needs to gather confidential trade secrets from its biggest competitors—not to leverage such knowledge and increase its market share, but to demonstrate in court that other companies can compete with Meta. According to court documents, Meta’s so hungry for this background on its competitors, it says it plans to subpoena more than 100 additional rivals, if needed, to overcome the FTC’s claims.

Meta is asking its competitors for a wide range of insights, from their best-performing features to the names of their biggest advertisers. It wants to see all business receipts, which to its competitors is seemingly turning the antitrust litigation into a business opportunity for Meta to find out precisely how other companies attract users, scale products, and gauge success.

Among rivals already subpoenaed are Twitter, TikTok owner ByteDance, Reddit, Pinterest, LinkedIn, and Snap. More requests could be made in the coming years, though, before the discovery for both sides concludes on January 5, 2024.

Snap, others oppose “overly broad” subpoenas

Unsurprisingly, nobody wants to hand over confidential trade secrets to Meta. And because the only competitor that the FTC named in the antitrust litigation was Snap, Bloomberg reports that Snap has become one of the most vocal opponents of Meta’s “overly broad” subpoenas.

In a court document, Snap lawyers said that what Meta wanted was effectively access to Snap’s “competitive playbook,” seeking “materials on every product and nearly every aspect of Snap’s business, with a time range that spans almost Snap’s entire existence.”

“This is exactly the type of information Meta would use to further harm Snap competitively,” Snap’s lawyers said.

Meta claimed the FTC sought similar information from Snap, but Snap claimed the FTC’s requests were “far narrower.”

Snap’s major concern is that Meta has a history of duplicating rival products’ features, including its controversial new feature dominating its Facebook and Instagram feeds, TikTok-like videos called Reels. Both Snap and ByteDance responded to subpoenas by asking Meta to limit the scope of documents requested and prevent Meta’s in-house counsel from accessing any documents containing sensitive trade secrets, which could then ostensibly be shared with Meta employees. Court documents show that Snap withheld “the vast majority of the documents Meta has requested,” and Meta rejected Snap’s offers to share confidential business information only with Meta’s outside counsel.

For Snap, the subpoena would be easier to swallow if it knew Meta couldn’t act on any information shared. Meta responded to the outside counsel request by noting that the court had already rejected “the same request from Snap” and reiterating that its in-house counsel is “not involved in competitive decision-making.”

Snap did not immediately respond to Ars’ request for comment.

Today, Bloomberg reported that a California federal court will decide approximately how many documents and, therefore, how many trade secrets Snap should have to reveal to help Meta build its defense against the FTC.

Snap is hoping the court will “quash the subpoena in its entirety,” in part because the request is “massively overbroad and unduly burdensome.” Snap claims Meta is asking Snap “to reconstruct virtually every decision Snap has made.” They also say Meta has not demonstrated a “substantial need” to justify “all the confidential commercial information that it demands.” Instead, they accuse Meta of “clear fishing expeditions” with “irrelevant” document requests, such as seeking information on the FTC’s investigation into Snap’s disappearing messages feature.

Meta wants the court to order Snap to produce all requested documents, partly because it claims that such a broad request “is common, and appropriate, in large antitrust cases.” It also claims that Snap is “not a truly disinterested non-party” in the antitrust litigation and that delays in producing documents were “designed to prejudice Meta’s defense.” As Bloomberg reports, as legal challenges to Meta’s subpoenas from other social media companies mount, a Meta spokesperson told Ars that all these competitors resisting compliance with subpoenas appears to somewhat substantiate Meta’s claims that the industry remains competitive despite Meta’s ownership of Facebook, WhatsApp, and Instagram.

“Meta competes vigorously with many companies to help people share, connect, communicate, or simply be entertained,” Meta spokesperson Christopher Sgro told Bloomberg and Ars. “As a natural step in preparing our defense to the FTC’s lawsuit, we have served subpoenas on companies with which we compete or which we believe have other information relating to the FTC’s claims.”



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