Center for American Entrepreneurship Says FTC’s Challenge of Meta Acquisitions a Decade After Approval Threatens America’s Startup Ecosystem

WASHINGTON, D.C. – John R. Dearie, President of the Center for American Entrepreneurship, today issued the following statement regarding the April 14, 2025 start of the Federal Trade Commission’s case again Meta Platforms, alleging that the company violated antitrust law by acquiring Instagram and WhatsApp more than a decade ago:

“On August 22, 2012, the Federal Trade Commission (FTC) voted unanimously to close its examination of the proposed acquisition by Facebook, now Meta, of Instagram, without taking action to block or delay the transaction.  In its press release, the agency stated: ‘Accordingly, the deal may now proceed as proposed.’  Facebook’s acquisition of Instagram closed on September 6, 2012.

On April 10, 2014, Facebook announced that regulators had cleared its proposed acquisition of Whatsapp.  The acquisition closed on October 6, 2014.

Now, more than a decade later, the FTC claims that Meta acquired Instagram and WhatsApp in an unlawful attempt to maintain a monopoly in social media, and is seeking to compel Meta to divest of both companies.  In response, Meta has argued that it faces ample competition from social media alternatives like TikTok, Snap, Reddit, and LinkedIn – and that regulators approved both acquisitions more than ten years ago.

While CAE has taken no position on the details of the FTC’s case again Meta, the case nevertheless raises significant concerns.  First, the FTC’s attempt to force divestiture of previously approved acquisitions – after years of subsequent business decisions based on the integration of the acquired companies – violates basic notions of fairness and reasonableness, which are the foundation of sound public policy.  More specifically, acquisitions are an altogether legitimate – indeed, essential – aspect of a thriving entrepreneurial ecosystem.  The FTC’s case against Meta more than a decade after approving the acquisitions of Instagram and Whatsapp injects major uncertainty into the nation’s innovation ecosystem and represents a threat to American startups.

Repeated research has demonstrated that thriving entrepreneurship is essential to productivity growth, economic growth, and net new job creation.  But entrepreneurship is also risky.  For fragile startups, there are three principal outcomes: fail, go public, or be acquired.  Failure is the most common outcome – a third of all new businesses fail by their second year, half by their fifth.  Many entrepreneurs dream of taking their company public, but few startups achieve the success and scale that a public offering requires.

Acquisition, therefore, is by far the most likely avenue for entrepreneurs and their employees to successfully realize the value of what they have created through years of hard work and sacrifice.  In a typical year, ten times as many startups are acquired as go public.  Indeed, according to surveys in recent years, nearly 60 percent of startups expect to be acquired.

Acquisitions enable startup investors to reclaim their invested capital, realize any gains, and recycle their capital into the next generation of startups.  In this way, acquisitions drive the ongoing flywheel of innovation-led economic growth, job creation, and opportunity expansion, whereby each generation of innovative new companies helps fund the next.

In addition, incorporation into a larger and more diverse company with greater resources and capacity is often necessary for an innovative product or service developed by a startup to achieve the scale necessary to reach a broader market and thereby improve consumer choice, promote society-benefiting innovation, and incentivize a competitive response from market rivals.

For all these reasons, acquisitions are a critical aspect of any thriving entrepreneurial ecosystem.  But acquisitions, like any other major business transaction, require clarity, certainty, and finality.  If approved transactions can be challenged and reversed by regulators – even a decade or more after approval – then acquisition as a viable pathway of value realization for American entrepreneurs and their investors will be profoundly undermined, disrupting the process of innovation-led economic growth, job creation, and opportunity expansion.

The Center for American Entrepreneurship is hopeful that these realities and concerns are kept in mind as the case is considered.”

About the Center for American Entrepreneurship

The Center for American Entrepreneurship (CAE) is a nonpartisan research, policy, and advocacy organization whose mission is to engage and educate policymakers in Washington and across the nation regarding the critical importance of entrepreneurs and startups to innovation, economic growth, and job creation – and to pursue a comprehensive policy agenda intended to achieve a stronger, more resilient, and inclusive U.S. economy through thriving entrepreneurship.

For more information, visit www.startupsUSA.org 

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