The Federal Trade Commission (FTC) voted to re-file an antitrust case against Facebook, accusing the social media company of being a monopoly and seeking to force it to sell Instagram and WhatsApp. Facebook acquired the two companies and received FTC approval of both transactions in 2012 and 2014, respectively. FTC’s initial case seeking to compel Facebook to sell off Instagram and WhatsApp was dismissed by a federal court, noting “The FTC’s inability to offer any indication of the metric(s) or method(s) it used to calculate Facebook’s market share renders its vague ‘60%-plus’ assertion too speculative and conclusory to go forward.”
Director of CEI’s Center for Technology and Innovation Jessica Melugin said:
“The Federal Trade Commission’s new complaint points to ‘high barriers to entry, including strong network effects,’ but that’s hard to square with the realities of a market where of users have accounts on multiple social media platforms and TikTok – an upstart challenging the largest platforms – is the most downloaded app of 2021. The expertise, time and money Facebook put into the once-glitchy Instagram app only benefited consumers, never harmed them. Given the prejudice shown against Facebook by some on the FTC, this case is a conflict-of-interest in search of a crime.”
CEI Senior Fellow Ryan Young said:
“The FTC’s new complaint relies heavily on wordplay to argue that Facebook has a monopoly. It argues that Facebook dominates the market for ‘personal social networking services,’ then defines that term in just such a way that excludes TikTok, Twitter, Clubhouse, Discord, and others from that market. Any market is a monopoly if you define it narrowly enough, and that is the only thing the FTC’s complaint successfully proves.
“Real-world monopolies are characterized by rising prices, restricted supply, and slowed innovation. Facebook and its competitors are largely free to consumers, while the prices they charge to advertisers have fallen by half over the last decade. Signing up for a competing service takes a few minutes and maybe a few dozen keystrokes. Facebook and its competitors are spending billions of dollars on research and development and constantly experimenting with new features. Monopolists do not act this way.
“Nobody but lawyers are benefiting from the FTC’s ideologically-charged word games. The agency’s attempt to rewrite antitrust policy is harming both consumers and the competitive process.”