Meta Wins FTC Fight, Keeps Instagram Growth Machine Intact

Key Points

• Meta Platforms has been embroiled in a monumental Federal Trade Commission lawsuit.
• Losing the trial would have devastated the company's social media empire.
• After its legal win, Meta will retain Instagram, an essential growth driver today. It will also hold on to WhatsApp, a platform with significant untapped potential.

Magnificent Seven giant Meta Platforms NASDAQ: META just got a significant weight lifted off its shoulders.

Back in April, MarketBeat detailed Meta’s legal battle that posed a potentially existential threat to the company.

Luckily, Meta emerged as the victor. Below, we’ll dive into the outcome of the company’s Federal Trade Commission (FTC) lawsuit and what it means going forward. First, let’s gain an understanding of why this trial is so important.

Losing Instagram and WhatsApp Would Have Shaken Meta to Its Core

Back in 2020, the United States FTC sued Meta on the grounds that the company engaged in anti-competitive practices. Specifically, the regulator claimed that Meta’s acquisitions of Instagram and WhatsApp gave the firm too much power within the social media landscape.

After the court dismissed and reopened the case multiple times, an official trial began on April 14, 2025. The worst-case outcome for Meta would have had devastating implications. The company would have had to sell Instagram and/or WhatsApp, two platforms that are critical to its future prospects. In particular, Instagram has been a massive growth driver for Meta.

According to eMarketer, Instagram accounted for around 7% of Meta’s U.S. advertising revenue a decade ago. The marketing research firm estimates that in 2025, that figure will surpass 50% and will rise to over 53% in 2026.

eMarketer also believes that Instagram monetizes its users more effectively than any social media platform. It estimates that Instagram will generate nearly $250 per user, on average, in 2025. That’s around 90% higher than the $132 estimate for TikTok and more than six times the $40 estimate for YouTube. Note that eMarketer released these estimates at the end of 2024, and the numbers may have changed considerably.

However, the data shows the absolutely vital role that Instagram plays in Meta’s growth. Losing it would have removed what is arguably the company’s most important revenue driver.

Additionally, while Meta’s WhatsApp revenues are likely around $2 billion today, the platform has significant growth potential going forward. Analysts at Wolfe Research have estimated that WhatsApp’s total addressable market is in the range of $30 billion to $40 billion annually.

While this does not mean Meta will hit these numbers any time soon or ever, it is still a large opportunity. Meta is likely already making significant progress in growing WhatsApp revenue. The company houses WhatsApp in its “Other Revenue” line item. Other Revenue last quarter was $690 million, up around 59% compared to a year ago. Overall, WhatsApp also represents a key asset that Meta by no means wants to lose.

Crisis Averted: Meta Puts FTC Lawsuit to Bed

On Nov. 18, Judge James Boasberg ruled against the FTC and in Meta’s favor. The company will not have to part ways with Instagram or WhatsApp, a monumental victory. Ultimately, while Meta may have held a social media monopoly in the past, the judge does not believe it does now. This is true considering that Meta faces significant competition today, particularly from TikTok. When the lawsuit began in 2020, TikTok was still in its infancy. In the trial, Meta itself acknowledged that it faces “fierce competition." On the day of the decision, Meta shares closed down around 0.7%, slightly less than the S&P 500’s 0.9% loss.

This reflects the fact that markets overwhelmingly anticipated that Meta would win the case. As a result, they did not reward the stock for the ruling. Still, removing the huge potential threat posed by the case is an indisputable positive for the company. It will allow the firm to focus more on its long-term objectives and fend off competition.

Meta’s Recent Fall Needs Important Context

Meta shares have fallen around 22% since releasing its Q3 earnings report.

However, this period has also seen an approximately 10% drop in the S&P 500 tech sector.

Thus, while much of Meta’s fall is specific to the company, it has been significantly exacerbated by overall tech weakness.

Despite its slide, Wall Street analysts generally remain bullish on the stock.

The MarketBeat consensus price target of $825 implies 40% upside potential.

Among analysts issuing price targets after the company’s Q3 earnings report, the average target is $852. This figure suggests shares could rise nearly 45%.