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Federal on Tuesday Judge James E. Boasberg ruled that the Federal Trade Commission’s efforts to crack Facebook could continue. The case itself is far from resolved. But by blessing the FTC’s theory that the monopoly can harm consumers, even when its product is free, the judge signaled that Facebook – and other technology platforms – are not invincible.
This is a big turnaround from last summer. In June, Boasberg, a judge in the United States District Court for the District of Columbia, granted Facebook’s request to close the case. (The company has since rebranded itself as Meta Platforms, but Facebook remains the defendant.) The problem, he said, is that the Federal Trade Commission, which is seeking to overturn Facebook’s acquisitions of Instagram and WhatsApp, has not provided any evidence that the company is was a monopolist. But in the same decision, Boasberg gave a clear plan on how to revive the case. All the government had to do was provide evidence that Facebook has a dominant share of the social media market.
Two months later, the agency filed a new complaint, full of data from Comscore, an analytics firm that Facebook itself uses, suggesting the company dominates the market on a variety of metrics: daily active users, monthly active users and user time spent. . The new evidence seems to have impressed Boasberg. “In short,” he wrote in the latest ruling, “the FTC has done its homework this time.”
Market share data does not decide things alone. The Federal Trade Commission, Boasberg notes, must also show that Facebook’s alleged monopoly is bad for consumers. Here the solution becomes interesting. From the outset, the antitrust movement against companies such as Facebook and Google has faced a major hurdle: How to show that consumers are harmed by companies whose main offerings are free? (Or, in the case of Amazon, famously cheap?) Antitrust law is not technically about prices, but since the late 1970s, judges have tended to interpret it as if it were. The standard way to challenge corporate mergers is to show that they will lead to higher prices. (See, for example, the beef industry.)
In recent years, legal thinkers, including FTC President Lina Hahn, have developed another way of thinking about the harms of technology monopolies: when there is no competition, companies will be free to do things that consumers don’t like and feel less pressured to improve their products. Scientist Dina Srinivasan, for example, claims that Facebook has lowered its standards for user privacy after defeating early rivals such as MySpace. The FTC has included this theory in its summary, as well as several others. Facebook’s dominance is also said to have allowed the company to pack more ads for consumers. And, the FTC notes, Facebook killed its own photo-sharing app after buying Instagram, suggesting that users would have more choice if the two companies had remained competitors.
So far, the question has been raised as to whether these non-price theories will succeed in court. That’s why it’s a big deal that Boasberg seems to have accepted them. “In short,” he writes, “the FTC argues that while Facebook’s acquisition of Instagram and WhatsApp did not lead to higher prices, they led to poorer services and less choice for consumers.
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