Beyond the Courtroom? Meta's Antitrust Battle and the Untapped Potential of Arbitration in the Digital Age

By- Sanskriti Bishnoi (4th year member, CASCA) and Swastika Saha Chowdhury (3rd year member, CASCA)

Introduction: Meta Under Fire: A Landmark Antitrust Trial

The Federal Trade Commission’s (“FTC”) lawsuit against Meta regarding its acquisition of WhatsApp and Instagram is by far the most direct challenge posed to the consolidation of market power by the Big Tech companies in recent times. The ongoing dispute poses critical questions regarding the intersection of law and emerging technology which compel a dissection of Meta’s impugned actions with a legal lens. The primary allegation posed by the FTC revolves around Meta’s acquisition of Instagram and WhatsApp in 2012 and 2014 respectively. The FTC has alleged that these acquisitions were intended at neutralizing the possibility of future competition that these platforms could pose to Meta and its established monopoly in the social network sector. The impugned litigation is not a new one; it was initially dismissed in 2021 and now has been brought to judicial scrutiny again. This case comes at a time of much needed clarity for the regulation and necessary restriction over recent attempts of the Big Tech companies to evade responsibility and severely disrupt healthy marketplace conditions, compelling a different approach to bring in swift, efficient disposal and enforcing accountability.

The verdict in this case would not just impact Meta and related parties but would also be relevant for determining the scope of competition law in the digital landscape. The FTC’s victory in the case could be of great precedential value in context of retrospective scrutiny of anti-competitive acts like those of Meta. On the other hand, a loss for them would pose questions on the significance of the antitrust framework in the digital space, thus casting a credible doubt on existing legal recourses to handle Big Tech regulation and a potential need to explore alternative dispute resolution mechanisms.

The blog shall emphasize the consequence that this case shall have on different aspects of antitrust and arbitration law. It shall, firstly, analyse the aspect of competition law, followed by an evaluation of whether arbitration is better suited in such scenarios and lastly, compare it with the conventional courtroom procedure and determine which one is better suited.

Zuckerberg on the Stand: Early Insights and the Protracted Nature of Litigation

The FTC’s claim is centered around the use of “Buy or Bury” strategy by Meta. It essentially means when a dominant player acquires a future or possible competitor by either discontinuing or neglecting the competitor. It is presumed to be an anti-competitive practice since it has the capacity of affecting market competition negatively. Unsurprisingly, while rejecting the implementation of such a practice/strategy, the CEO of Meta, Mr. Mark Zuckerberg, has repeatedly maintained his stance about the acquisitions being solely strategic in nature and no aspect of them being hostile. Zuckerberg’s statements on the case have attempted to negate the argument of the “Buy or Bury” strategy by highlighting the competition faced by Meta from giants like Google and TikTok. He has justified the acquisition by stating that the motive is to enhance user experience. Interestingly, the government has been stern on its stance by portraying the internal communications of Meta as reflective of the anti-competitive nature of the acquisitions.

The confrontational courtroom debate only represents the drawn-out and combative character of the ongoing anti-trust spate between the two parties. Cases like these are expected to go on for months due to high stakes involved. In addition, it imposes considerable high costs on the parties, both in terms of finances and reputation while raising concerns about procedural efficiency at the same time.

Arbitration in particular, offers a procedural alternative to manage trials of this kind and emphasizes better cooperation, lesser formalities and a quicker and more efficient process of resolving disputes concerning such complex market dynamics. Given the lengthy courtroom scrutiny involved in the case at hand, conventional litigation might enhance the limitations and offer no practical solution. It is, however, pertinent to note that arbitration is not a cure-all approach, it has the capacity of offering a method which allows for more specific and focused discussions on all issues, big and small, which might go unnoticed in a conventional courtroom set-up due to the procedural and other requirements. This becomes all the more important in cases like the present one, given the relevance of the confidentiality aspect in the case.

Breaking Up Meta: A Risky Remedy?

The most dramatic aspect of this case is the FTC’s proposed remedy of divestiture of Instagram and WhatsApp out of the hands of Meta. If accepted, the divesture would represent an unprecedented inversion of mergers that have long been a part of Meta's framework. Meta's strategic approach as well as the billions of users who depend on these platforms every day throughout the world would also be greatly impacted. It also creates a dilemma regarding how to address mergers of this sort especially when the markets are continuously evolving. And if litigation is the chosen method for the case, the most expected outcome would be a decision centered around divesture as the only possible solution.

However, the consequences of imposing such a remedy on Meta would travel beyond the parties involved and will go on to question the very concept of mergers and acquisitions in the market. These constitute a very important contributor of innovation in the market and with a remedy of this kind may result in setting a precedent which changes the narrative towards mergers and acquisitions to a rather negative one. This is the reason why experts have argued that ordering a divestiture in this case might do more harm than good and will have almost no impact on restoring competition. It is pertinent to adopt a hybrid approach over a one size fits all approach in handling resolution of digital anti-trust disputes.

Appeal for Proactive Solutions: Arbitration Clauses in the Digital Realm

The current Meta case is in a longline of cases that have been filed against Big Tech companies for acquisition to eliminate competition and abuse of dominant position. This calls for the need for a more proactive, efficient and less-time consuming solution to these cases rather than the long-drawn process of litigation. Here, arbitration comes into the picture. Arbitration promises to offer not only heightened confidentiality prized by tech companies, but also broad international enforceability, neutral and expert decision-making and increased efficiency. The inclusion of an arbitration clause before litigation into various tech acquisition agreements is a proactive way to address potential antitrust issues such as but not exclusively monopolistic tendencies including killer acquisitions, foreclosure of the market to competitors, abuse of dominant position and substantial lessening of competition early on.  

At the very outset, the process of arbitration requires the parties to select an arbitrator. This provides both parties with a choice to select an arbitrator who has specialised knowledge in the area of the dispute. Disputes regarding tech law are complicated in nature with various intricate factual details which require specialised and sophisticated knowledge of the subject. This differs from a traditional courtroom setting where there exists the possibility of the judge not being well-versed in the specific area of law, thus failing to give judgements which are specific and tailored to the legal dispute at hand.

Secondly, confidentiality clauses with regard to trade secrets and sensitive information are present in every tech acquisition agreements. Arbitration proceedings, being private in nature, offer a potentially more viable solution. Courtroom litigation and the records of those are publicly available which has the potential to harm competition in the digital market after the resolution of such dispute. However, the private nature of arbitration can help to prevent any anti-competitive practice from arising in the market after the resolution of such dispute.

Thirdly, tech acquisition deals often involve international transactions which in turn creates jurisdiction into an issue in traditional litigation. However, enforcement of an arbitral award is significantly an easier process in the international arena. Article III of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention, 1958) and Article 35 of the UNCITRAL Model Law on International Commercial Arbitration provide for the recognition and enforcement of an arbitral award across all jurisdictions.

Lastly, arbitration as a process is faster and more efficient as compared to traditional courtroom litigation. It is a streamlined process with a specified timeline which ensures that disputes are resolved in a speedy manner. As per the International Survey on Dispute Resolution in Technology Transactions by the World Intellectual Property Organization (WIPO), Respondents estimated that court litigation in their home jurisdiction took on average approximately 3 years and court litigation in another jurisdiction took on average 3.5 years. On the contrary, it was indicated that arbitration took on average slightly more than 1 year.

One of the steps towards arbitration as a resolution mechanism for tech disputes is the recent example of the case of  In re Google Digital Advertising Antitrust Litigation, more popularly known as Stellman v Google LLC. Here, the U.S. District Court granted Google’s motion to compel arbitration after the existence of an enforceable arbitration agreement was proven by Google. This highlights the potential of arbitration as a method of dispute resolution in the digital realm.

Conclusion

To conclude, there exists high stakes in tech acquisition disputes, such as the current Meta case or other disputes in the digital realm and the precedents set by these are widespread. The outcome of this trial will undoubtedly influence the regulations and intricacies of acquisitions in the digital realm. However, litigation as a process is prolonged and time-consuming with the potential of a lack of specialised judge adjudging the matter. Arbitration, in this regard, is a much more streamlined and expert-driven process which is flexible without facing challenges related to international jurisdiction and enforcement of arbitral awards, unlike that of judgments.

As a precedent has already been set by the Stellman v Google LLC case, arbitration is a viable solution for digital antitrust disputes without the constraints of traditional courtroom litigation. Moving forward, the role of arbitration in tech acquisition agreements must be evaluated in order to address antitrust concerns in a more proactive manner. The Meta case is another lost opportunity where the path towards the resolution could have been arbitrated but instead is now lost in the maze of traditional long-drawn courtroom litigation. The potential of arbitration as a means to enhance regulatory efficiency must not be ignored time and again.