Zuckerberg testifies in FTC'S antitrust probe

Yahoo Finance’s On the Move panel discuss Facebook CEO Mark Zuckerberg testifying in front of the FTC as part of the agency’s antitrust investigation.

Video Transcript

JULIE HYMAN: Facebook-- I'm just looking at its trailing PE here. It looks like it's about 32, so even higher than what Kevin was talking about. But let's talk about Mark Zuckerberg and the potential risk for the company. The CEO reportedly testified remotely for two days this week before the Federal Trade Commission. It has to do with antitrust.

I believe Dan Howley has been watching that situation. So Dan, what do you make of this? How serious is this? And it's also interesting that we're only just now finding out about it.

DAN HOWLEY: Yeah, he sat there for two days doing basically interviews with the FTC. And this is into whether or not Facebook kind of strong-arms smaller companies into either acquiescing to demands to be acquired or threatens to crush them by making basically competing products. And we've seen this in similar situations with something like Slack, where Slack didn't agree-- sorry, Snap, Snapchat. They didn't agree to Facebook's terms to be purchased.

And so what Facebook essentially did was took Instagram and said, OK, now this is Snapchat. And they have their new Reels feature on Instagram, which is exactly what TikTok is. So you see how Facebook uses its capabilities and its reach to try to squash competition. And that's what the FTC is looking at.

It's not just the FTC that's looking at that, though. It's also the DOJ. It's a coalition of state attorneys general. It's the House Judiciary Committee. All of these are investigating Facebook to see if what they're doing is anti-competitive and hurts consumers or innovation.

And I think one of the things that's going to come out of this eventually is how many different companies Facebook had its eyes on and what it was doing when it had its eyes on them. Remember, they purchased WhatsApp, the messaging app, only after they had used a VPN service that they were offering to look at how users were accessing WhatsApp, and then they realized that it was a serious competitor to Facebook Messenger. So they went out and purchased that service.

So that's something that I think regulators are looking at and continue to look at. Same thing with Instagram, again, and Snap, and the little bit of TikTok nonsense that they have going on that is Reels.

ADAM SHAPIRO: Daniel, I was curious, though-- having the FTC conduct this hearing-- and it's different than the spectacle of a congressional hearing-- might that actually play to Mr. Zuckerberg and Facebook's advantage? Because you don't have Congress people trying to score points that may be really off base.

DAN HOWLEY: I think that it is more dangerous to have the FTC going after Facebook, specifically because they're the ones that have lobbed huge fines at the company, right? Sure, Mark Zuckerberg can sit there in front of a hearing and look bad or have poor responses, or perhaps have good responses depending on the day. But the FTC is the one that comes out and says, look, we're going to fine you to the tune of billions of dollars.

Obviously, it's a drop in the bucket. I believe their fine was $5 billion that they had to pay as a result of the Cambridge Analytica fiasco. But still, that's billions of dollars that Facebook has lost. It's not a huge amount for the company itself, but I think it's more concrete than something we would get out of the House Judiciary Committee.

Sure, they could eventually come up with new laws down the line. But it wouldn't be something that specifically targets Facebook. It would have to be something that targets an industry at whole.