In the Long Run, the Meta Case Is Dead

It’s official: Meta is not illegally monopolizing the “personal social networking” (PSN) market through its 2012 purchase of Instagram and 2014 purchase of WhatsApp. The Federal Trade Commission’s odd definition of a PSN was the downfall of the agency’s case, but the long delay between the acquisitions and the issuance of this opinion allowed for a natural experiment showing how competitive the social media market actually is.

In the waning days of the first Trump administration, the FTC first brought its case charging that Meta (then Facebook) acted illegally under Section 2 of the Sherman Act in acquiring Instagram and WhatsApp. The FTC reviewed both of those deals at the time, and the agency decided to take no action to prevent them.

During the then newly minted Biden administration in June of 2021, U.S. District Judge James Boasberg dismissed the complaint. But the FTC refiled later that same year, and in January 2022, Judge Boasberg allowed the case to go forward. The relay race continued under the second Trump administration, with the trial taking place earlier this year - eons after the acquisitions in ‘tech time.’  

The first order of business in any antitrust trial is defining the market alleged to be monopolized by anticompetitive behavior. The FTC defined the relevant market as including Facebook, Instagram, Snapchat, and a smaller player, MeWe, on the grounds that only those platforms are engaged in connecting friends and family. The FTC invented this distinction for the connection function, as opposed to platforms that serve content from accounts users don’t follow or know offline. This conveniently left YouTube and TikTok out of the proposed market.

If you use these platforms, you know it is an odd form of gerrymandering of the relevant market. “Friends and family” activity is declining on Meta’s platforms, and the company has adapted by offering more short video clips, a service called Reels, to compete with the popular formats on TikTok and YouTube. As Judge Boasberg observed in his opinion, Facebook, Instagram, TikTok, and YouTube have all “recently converged to offer similar experiences.”

More generally, if you live on planet Earth, you know that all four of those platforms (and others) compete fiercely for your eyeballs and advertisers’ dollars. Most users didn’t need weeks of litigation to doubt the concept of creating a submarket for social media interactions with people you know, as distinguished from watching TikTok videos from creators; you can do both on all of those platforms. Narrowing the market may have helped the FTC claim a higher market share for Meta's products, but it didn’t reflect the marketplace's reality.

Through the miracle of periodic technical failures, we can observe real world examples of which platforms Americans use as substitutes and, therefore, which ones should more likely be included as competitors in the same market.

Meta’s apps suffered a several-hour outage in 2021, and the company took note of where its users spent time instead. The largest share of displaced users landed on TikTok. YouTube came in second for taking in digital refugees. But both of those platforms were excluded from the FTC’s proffered market definition. Snapchat was included in the FTC’s relevant market, but the app registered only a fraction of the different platforms’ temporarily displaced users during the Meta outage. When the unintentional experiment was run in reverse, namely the brief 2025 U.S. TikTok ban, there was a spike in Facebook and Instagram usage that also suggests the FTC’s market definition was flawed.

Judge Boasberg agreed, writing in his opinion that, “the FTC has an uphill battle to establish the contours of any separate PSN market and Defendant’s monopoly therein.” He continues that, “(t)he Court ultimately concludes that the agency has not carried its burden: Meta holds no monopoly in the relevant market. Judgment must therefore be entered in its favor.”

Because Judge Boasberg (rightly) didn’t buy the FTC’s definition of the relevant market, the opinion didn’t have to consider consumer welfare in this case. But we might sleep better tonight if we look at how consumers have fared with Meta’s acquisition of Instagram.  

Users benefited from Meta’s ownership.

When Instagram was acquired, it was not profitable, had only a handful of employees, and it was far from evident that the company had the means to improve and scale on its own. Its new parent company poured financial resources and technical expertise into the once glitchy Instagram app. To the benefit of consumers, Meta has consistently improved and added features to the platform. The price for users has always been zero, the platform has more users than ever, and the product's quality has consistently improved. No price increase, more output, and continued innovation are not what one expects to see from a monopolist.   

Some argue that Meta should have been found guilty of monopolization because Facebook was acting illegally at the time of the acquisitions. Leaving aside that this approach is a misreading of the statute, which stipulates that its focus is on the present or near future, it also misses the forest for the trees.

If the acquisitions had significantly thwarted competition, how would we explain the rise of TikTok in 2018? One-third of American adults now use TikTok. And what of YouTube reaching 1 billion users in 2014 and now having 2.7 billion users? If then-Facebook was a monopolist, fortified with these two acquisitions, it wasn’t a very good one.    

And if those acquisitions allowed Meta to erect barriers to entry against competitors, those barriers were porous enough to allow for X, TikTok, YouTube, Truth Social, iMessage, Discord, Signal, and others to claim substantial numbers of users by 2025.

Perhaps a better explanation is that Meta is not a monopolist, and that the FTC got it exactly right in letting the acquisitions proceed in 2012 and 2014. But we have now spent a lot of time, energy, and money coming to the same conclusion – more than a decade later.   

Jessica Melugin is director of the Center for Technology and Innovation at the Competitive Enterprise Institute and an Innovators Network Foundation Antitrust and Competition Policy Fellow.