From "Roadshow" to Expert Witness: Courtroom Drama As FTC's Economist Finally Takes Stand

In 2019, according to reports in The New York Times and the Washington Post (reprinted here), three men went on a “roadshow” to federal and state antitrust enforcers laying out what a potential antitrust case against Facebook could look like. They were Chris Hughes, Mark Zuckerberg’s former Harvard roommate and fellow Facebook co-founder, who became a critic of the company after leaving; Tim Wu, the Columbia Law professor who served as a Special Assistant to President Biden for Technology and Competition Policy; and Scott Hemphill, an NYU Law professor and Ph.D. economist.

The roadshow worked. In the last days of the Trump administration, in December 2020, the FTC and 48 States sued Facebook for violating the antitrust laws with its acquisitions of Instagram and WhatsApp. Two years after that, the FTC retained its expert economist: Scott Hemphill, who took the stand on Days 17, 18, and 19 during the fifth week of the trial to break up Meta.

The story of how the Facebook case came to fruition took center stage during Meta’s cross of Hemphill on Day 18, as lead defense counsel Mark Hansen tried to paint Hemphill as a “law professor” with an “axe to grind.” Hansen made the point with a newly revealed document he said the FTC never produced to Meta: a slide deck from the “roadshow” presentation, as shown in pictures of a smartphone displaying those slides. It was an explosive behind-the-scenes look at how the sausage gets made.

But before we get there, let’s go through Hemphill’s direct examination, which featured frequent questions from Chief Judge Boasberg. This email is overlong, so be sure to click to expand the message to see the whole thing or open it in the app or on the web. We’ll catch you up on testimony from Meta’s Alex Schultz, plus Meta’s Tom Alison on Day 19, in a future post. This post covers all three days of Hemphill.

What the FTC Has to Show

We discussed the FTC’s burden of proof before trial started and previewed some of the key arguments on market definition in our Day 1 summary of opening statements. But to briefly restate: to prove its monopolization case under the Sherman Act, the FTC must prove that (1) Meta has monopoly power in a relevant market and (2) that Meta gained or maintained that power through something other than competition ...