Social media giant Meta Platforms (NASDAQ:META) could be forced to spinoff or divest Instagram and WhatsApp as the result of a pending trial with the Federal Trade Commission.
The FTC accuses Meta of using its considerable power to acquire Instagram in 2012 and WhatsApp in 2014.
"It saw companies like Instagram and WhatsApp experiencing astronomical growth, and that's the point at which it resorted to this buy-or-bury scheme where, if it couldn't outcompete a rival, it either bought them out or cut them off its network," Khan said on "Squawk Box" Monday.
Khan said that Meta, previously known as Facebook, "panicked" when it made the acquisitions and could still be forced to reverse course years later.
"There's no expiration date when it comes to the illegality of the transaction. I think there is a way in which the entire social networking ecosystem looks different today because Facebook was permitted to go out and make these acquisitions."
Khan said the FTC's case, which dates back to 2020, is about "free and fair trade."
Facebook paid $1 billion to acquire Instagram in 2012 and $19 billion to acquire WhatsApp in 2014.
Read Also: Mark Zuckerberg’s Empire in Jeopardy as Meta Faces Antitrust Battle in Court
Why It's Important: The initial FTC complaint was dismissed before being accepted in 2024 with an amended complaint. Meta has filed a pretrial brief saying it disagrees with the FTC and that the company is not a monopoly.
On Monday, new FTC Chairman Andrew Ferguson said Meta is "certainly" a monopoly during an interview on Fox Business.
While the FTC trial could take some time, Meta could be forced to divest Instagram and/or WhatsApp.
The FTC trial unfolds as Meta CEO Mark Zuckerberg seeks to dismiss the case while also reportedly strengthening ties with President Donald Trump.
Zuckerberg donated $1 million to Trump's inauguration fund and has had several meetings with Trump since his January inauguration. Ferguson was questioned by Congress if he would dismiss the case against Meta if asked to do so by Trump.
"Until the trial is over and until we actually get a liability verdict and then a remedy, we're all going to have to wait and see," Khan said.
There are betting markets on Polymarket for potential moves by Meta due to the FTC trial.
META Price Action: Meta stock is down 1.7% to $534.10 on Monday versus a 52-week trading range of $414.50 to $740.89. Meta stock is down 10.9% year-to-date in 2025.
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