Facebook's antitrust challenge has arrived in the form of lawsuits from the FTC and 40 plus states. The market's muted response to FB shares reflects the allegations have been known since July. That said, they are serious and will take years to navigate.

The core issue at hand is Facebook's historical approach to acquire competitors versus compete.

We see four potential outcomes, in order of most likely:

1. Facebook pays a big fine.
2. Future M&A activity gets more difficult.
3. Facebook wins and nothing happens.
4. The company is broken up.

The worse outcome for Facebook is M&A becomes more difficult. While Facebook has unprecendented network effects with roughly 3B monthly users, network dillution is possible with upstarts like TikTok.

Despite these lawsuits and bad press, it's unlikely to impact engagement on Facebook's platforms. The Cambridge Analytics episode was largely more damaging PR, and yielded no change in engagement. We're addicted to Facebook.

Tim Cook, in an unrelated podcast today, mentioned a "lack of responsbility" from Big Tech outside of Apple. This makes sense given It's easy for Apple to take the high road given they aren't reliant on advertising.