The simple test that blew up the FTC's case against Meta
Deep Dives
Explore related topics with these Wikipedia articles, rewritten for enjoyable reading:
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United States v. Microsoft Corp.
13 min read
The landmark 2001 antitrust case against Microsoft provides essential historical context for understanding how the government approaches tech monopoly cases, the legal standards involved, and why the FTC's market definition strategy in the Meta case was so problematic compared to the clearer market boundaries in the Microsoft case
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Heraclitus
13 min read
Judge Boasberg directly quoted Heraclitus's famous river metaphor to explain why antitrust definitions struggle with rapidly evolving tech products. Understanding this pre-Socratic philosopher's doctrine of constant change ('you cannot step into the same river twice') enriches the reader's appreciation of the legal reasoning
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Relevant market
10 min read
The entire FTC case hinged on defining the 'relevant market' for antitrust purposes - a technical legal and economic concept. Understanding how courts determine market boundaries, substitutability, and competitive constraints explains why the FTC's narrow 'personal social networking' definition failed against evidence of broader consumer behavior
On Tuesday, a federal judge ruled that Meta’s acquisitions of Instagram and WhatsApp did not create an illegal monopoly. The reasons why were clear even before the Federal Trade Commission filed its case. But a single experiment conducted by the company wound up persuading a judge that the FTC has been attempting to protect a market that doesn’t exist — and now the government’s most serious effort to regulate Meta appears to have collapsed.
It is an outcome that many of us have long predicted. The FTC’s case rested on the idea that Meta competed in a market called “personal social networking,” which comprised just four apps: Facebook, Instagram, Snap, and MeWe. The government sought to distinguish these apps, which it said were used primarily by people who wish to interact with friends and family members, over more general-purpose entertainment apps such as YouTube and TikTok.
In December 2020, when the FTC filed its case, I predicted that the government would lose due to its shoddy market definition. At that time, TikTok already had 800 million users, and the entire consumer internet was remaking itself around the company’s innovations. Citing internal company documents that Platformer had obtained, I noted that after TikTok was banned in India, Instagram use surged — clear evidence that the companies were and remain close rivals.
A year later, US District Court Judge James E. Boasberg dismissed the FTC’s lawsuit for failing to provide sufficient evidence to back up its assertion that Meta held a monopoly in personal social networking. But he let the FTC try again, and allowed the case to move forward in 2022. Even then, he warned the FTC that it was on shaky ground. (“Although the agency may well face a tall task down the road in proving its allegations, the court believes that it has now cleared the pleading bar and may proceed to discovery,” Boasberg wrote at the time.)
The trial finally began this April. From the start, the government struggled to get Meta executives to offer evidence that would bolster their case. When the government pressed CEO Mark Zuckerberg on the idea that Meta’s core value proposition is to connect friends and family, Zuckerberg pointed out — accurately — that over the past few years usage has gradually shifted to watching Reels and other content made by creators.
In the end, it was a simple experiment that undid ...
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