Is Meta Really a Monopoly? Debunking the FTC’s Market Definition Metaphysics

Amidst the continued frenzy of calls to revert antitrust law back to its ancien régime and break up “Big Tech,” it is wise to remain firmly rooted in the antitrust enlightenment and first principles. One of these is that to illegally “monopolize” “any part of trade or commerce” in violation of §2 of the Sherman Act, a firm must have monopoly power. Indeed, the very issue of whether large technology firms actually have such power was on full display with recently filed motions for summary judgment by Meta and the Federal Trade Commission (FTC) in their ongoing antitrust case involving Meta’s acquisitions of WhatsApp and Instagram, where the FTC alleges that Meta is a monopolist in the “personal social networking” (PSN) services market.

The motions for summary judgment come during a growing trend among the neo-Brandeisian antitrust reactionaries to stress that the antitrust laws should be interpreted according to textualist principles—a thinly veiled attempt to try and conscript social and constitutional conservatives who favor this method of statutory interpretation as foot soldiers in their ongoing assault against corporate America and especially “Big Tech.” For example, in an article published the same day as Meta’s motion, two neo-Brandeisian commentators claim that antitrust merger enforcement should be grounded in a textualist analysis that they argue will result in significantly greater scrutiny of deals relative to current standards.

Notwithstanding that the text of the antitrust laws don’t—by design—get one very far without construction by the courts, what might a textualist or originalist interpretation mean for monopolization cases? Well, for one thing, in the early days of the Sherman Act “monopolize” was defined by the Oxford English Dictionary and other authoritative sources in terms of “exclusive possession (of a trade)” or “to get to keep entirely to oneself”—hearkening back to the earlier mercantilist period where firms were given exclusive monopoly rights by the state. In fact, that is still essentially the definition used by the Oxford English Dictionary, which defines the underlying noun “monopoly” as “the condition of having no competition in one’s trade or business.” That, of course, coheres with the standard definition in introductory economics textbooks: a monopoly means one firm in the market.

Similarly, the 1895 edition of Webster’s Dictionary defined “monopolizing” as “engrossing sole power or exclusive right; obtaining possession of the whole thing,” which effectively implies a 100% market share, as Professor Hovenkamp suggests in a forthcoming article. As such, if strict textualism or originalism is how the neo-Brandeisians would like to interpret the antitrust laws going forward, well then not only is there a very good argument that there is no case against Meta (who the FTC only alleges has over a 60% share), but only very few monopolization claims are likely to pass muster at all. Situations like U.S. v. Microsoft, where a monopoly firm with a near 100% market share could be plausibly claimed, are few and far between—a conclusion the neo-Brandeisians, in pretending to pick up the mantle of Justice Scalia, are unlikely to welcome in their war against Big Tech “monopolies.”

Indeed, as interpreted by the courts today, monopoly power can be proven in one of two ways. First, indirectly, by defining a relevant market and showing that a firm has a share persistently greater than 65% protected by barriers to entry. Alternatively, monopoly power can be proven by offering direct evidence in the form of high pricing, output restrictions, or reduced quality in a way that evinces the existence of substantial market power. However, as far as the latter approach is concerned, and as perhaps every consumer tacitly knows, Meta does not show signs of monopoly power. The company offers a free product and has greatly expanded its user base since the allegedly anticompetitive acquisitions. It also competes with many social media firms, both generally and in specific areas, including TikTok (short videos), Twitter (news), LinkedIn (networking), Pinterest (photos), Apple (messaging), and YouTube (long videos)—the list goes on.

The FTC is forced to rely on the indirect case to get around these realities. In so doing, it defines a “PSN services” market that only includes Facebook, Instagram, Snapchat, and MeWe by claiming that these distinctly rely on “a particular type of social graph built around friend and family connections,” as separate from social graphs built around professional connections or shared interests—even if users also engage with personal connections with firms outside the PSN market (and vice versa). In other words, sharing a short video with strangers on Meta’s Reels is in the PSN market, but sharing videos with friends on TikTok is not counted in the PSN market because, for the FTC, TikTok is deemed not to be “for friends and family content.” Similarly, messaging strangers on Facebook would be counted in the PSN market, but messaging family and friends using iMessage is not in the PSN market.

As such, the FTC’s market definition is reminiscent of theologians like Duns Scotus defining formal distinctions when none exist in reality. Asserting that Facebook is “built” on users’ personal connections rather than their interests or professional network, even if they engage in all these ways on the platform, does not make it any less reasonably interchangeable from alternative social media platforms thought to be “built” on users’ interests or professional network which also offer users the ability to engage with their personal connections. Indeed, this conclusion is supported by the evidence Meta presents in its motion: whether using quantitative metrics like the hypothetical monopolist test or the qualitative Brown Shoe factors that analyze “commercial realities,” there are many substitutions between Facebook and other social media platforms decreed by the FTC not to be outside the market.

At bottom, as the neo-Brandeisian crusade against Big Tech rages on, the FTC’s case against Meta relies on faulty formalisms in trying to show, contrary to reality, that Meta has monopoly power under current legal standards—let alone those standards that would be used on the textualist and originalist interpretation that some neo-Brandeisians now selectively champion as they frantically try to build a bipartisan coalition against corporate America in view of a potential future Republican administration. And, while the antitrust cases against Big Tech will nonetheless push forward, FTC v. Facebook appears to be yet another challenge that the government is poised to lose. It is “built” on a theory of market definition that relies not upon a real distinction between Meta and its many rivals, but to paraphrase Thomas Aquinas, in actuality “nothing but straw.”