A Very Heraclitean (and Schumpeterian) Decision: Meta Prevails Against the FTC

Twenty-five centuries ago, amidst the vibrant culture of Ancient Greece that would form the foundation of the Western intellectual tradition, and even before the storied arguments among Socrates, Plato, and Aristotle, a great debate raged between two philosophical giants about the nature of reality, the reverberations of which would be felt throughout the history of thought. On one side was Heraclitus, who argued that the brute fact about the world was change and becoming, viewed as a fire (as opposed to prior explanations of air, earth, and water) that even outstripped the laws of logic through the uniting of things opposite. Against this stood the idealism of Parmenides, who maintained that the order of reality must cohere with the laws of thought, thereby requiring one to deny the existence of the contradictory world of change in favor of an eternal, unchanging reality of Being.

In a very real sense, this debate provided the philosophical backdrop for Judge Boasberg’s landmark decision ruling in favor of Meta in its long-running antitrust case with the FTC, alleging that Meta maintained a social media monopoly through its acquisitions of Instagram and WhatsApp over a decade ago. As he explained in the opening sentences of his nearly 90-page opinion:

Believing that the only constant in the world was change, the Greek philosopher Heraclitus posited that no man can ever step into the same river twice. In the online world of social media, the current runs fast, too. The landscape that existed only five years ago when the Federal Trade Commission brought this antitrust suit has changed markedly. While it once might have made sense to partition apps into separate markets of social networking and social media, that wall has since broken down.

As I and many others predicted, this was likely the inevitable outcome of a highly flawed case that one didn’t need to consult the Delphic Oracle to realize was a loser from the start. Indeed, just as most of the great philosophers from Plato and Aristotle, to medieval systematizers like Aquinas and modern speculative thinkers like Hegel, all the way down to more recent philosophical geniuses like Heidegger and Wittgenstein, rejected Parmenides’ view about the changing nature of the world, so too did Judge Boasberg rebuff the FTC’s formalistic attempt to fix the relevant market to a “personal social networking” (PSN) definition focusing on friends and family interactions that included only Facebook, Instagram, Snapchat, and MeWe.

Regardless of the relevant market the FTC wanted to define, the real-world evidence that Facebook has long faced heavy competition from video platforms like TikTok and YouTube was overwhelming. As Judge Boasberg found, the empirical evidence based on several key natural experiments involving product outages and bans (as well as several constructed field studies analyzing consumer behavior) “tell a consistent and unmistakable story. When consumers cannot use Facebook and Instagram, they turn first to TikTok and YouTube. When they cannot use TikTok or YouTube, they turn to Facebook and Instagram. That evidence leaves the Court with no doubt that TikTok and YouTube compete with Meta’s apps.”

The FTC’s case thus depended primarily on finding a way to get Judge Boasberg to overlook these market realities. Its core strategy was, as I have previously explained, and in keeping with a Parmenidean idealism, to define the relevant market formalistically using the qualitative Brown Shoe factors to limit it to so-called friends and family PSN sharing—privileging this analysis against the more probative direct and quantitative indirect evidence that belied any finding that Meta had monopoly power. And yet, even on its own terms, Judge Boasberg thoroughly rejected the FTC’s theory, finding decisively that “[e]ven when considering only qualitative evidence, the Court finds that Meta’s apps are reasonably interchangeable with TikTok and YouTube.”

The only other real alternative for the FTC to demonstrate that Meta was a monopoly was to basically fix the relevant horizon for assessing Meta’s monopoly power before competition from TikTok and YouTube meaningfully arose—as if ignoring the changes that had occurred. However, while the FTC could, in theory, have brought a claim alleging that while Meta no longer had a monopoly, it did have a monopoly within the Sherman Act statute of limitations, that is not the case that it brought, and thus not the one Judge Boasberg evaluated. Instead, the FTC argued, channeling Parmenides, that the relevant market Meta monopolized had remained essentially static for over a decade. As such, Judge Boasberg had no choice but to, as the law requires, force the FTC “to prove that Meta is violating the law now.”

Judge Boasberg’s Heraclitean opinion, animated as it is by a fulsome assessment of economic realities rather than abstract methods of market definition, and by his embrace of the dynamism that defines the social media world, is a clear move toward a broader Schumpeterian model for thinking about antitrust enforcement. On this view, as I have detailed, markets are not static but a dynamic, evolutionary process, whereby any analysis of market definition must prioritize current economic realities and consumer behavior rather than formalistic, qualitatively focused market definitions like the FTC’s PSN market. Indeed, even Judge Boasberg’s summary judgment opinion noted that anticompetitive conduct is identical to neither behavior that harms competitors nor hinders neoclassical equilibrium, but instead that which harms “the competitive process and thereby harms consumers.”

The significance of Judge Boasberg’s opinion in FTC v. Meta is difficult to overstate: Now, not only has the government failed to achieve the major breakup of Google it sought, but Meta will continue on as it has—effectively signaling the end of the populist antitrust crusade to achieve a meaningful breakup of Big Tech. And yet, as Heraclitus would certainly understand, for every end there is a new beginning—here, perhaps a movement toward a new Schumpeterian approach to antitrust enforcement that welcomes, not fears, the dynamism that defines modern economic life and ensures that antitrust enforcement does not stifle procompetitive and innovative behavior, including M&A, that drives it.