FTC v. META

META IS GOOD BUT NOT THAT GOOD

by Peter Thomas Busch

Washington DC Chief Judge James E. Boasberg threw out the Federal Trade Commission’s monopoly case against Meta Platforms, Inc.

In FTC v. Meta, No. 20-3590 (JEB), pronounced on 18/Nov/2025, Chief Judge Boasberg ruled that Meta, which includes Facebook, Instagram and WhatsApp, directly competes with TikTok and YouTube. The court ruled that within that social media market, Meta does not maintain a monopoly.

Meta, formerly Facebook, purchased Instagram in 2012 and WhatsApp in 2014. Meta sought to monopolize the personal social networks market by purchasing these competitors, instead of competing with them, according to the complaint originally filed by the Federal Trade Commission (FTC) on December 8, 2020.

Chief Judge Boasberg noted that the FTC approved the purchases of Instagram and WhatsApp, and that since then, there is more competition, not less.

The FTC case went sideways when the court ruled that Meta was a social media app and not a personal social network app. If Meta had been defined as a personal network app, the platform would have been operating in a much smaller market that excluded TikTok and YouTube.

And the FTC case would have been much stronger, as a result.

This grouping was reinforced with the shift in all the apps from sharing personal content with friends to users viewing independently created Reels. The lapse of time in the litigation was a culprit because the technology changed rapidly and the relationship between competing apps change constantly.

Chief Judge Boasberg referred to this phenomena as a rapidly changing river.

Users of the apps now post less personal information to share with friends. Instead, users spend time on the apps to publicly view independently created videos, called Reels, and share information with friends privately with the messenger app available on the platforms.

This change in use has changed the definition of Meta from a personal network app, where people connect and share posts with friends, to a social media app, in which users view videos created by people unknown to them.

The court ruling also distinguished between market power and monopoly power, noting that Meta had market power, but Meta lacked monopoly power, especially in direct competition with TikTok and YouTube.

The audience was analyzed to show that the apps were interchangeable by users, which reinforced the direct competition theory. When Facebook is down for technical reasons, for example, people move to TikTok and/or YouTube.

And the FTC expert on Meta’s monopolistic power was found by Chief Judge Boasberg to lack the objectivity necessary for providing the court with guidance. Professor Scott Hemphill had enticed the FTC into filing the complaint against Meta.

The court also noted that the FTC filed the complaint because of Hemphill’s presentation to the FTC. And, the FTC even followed the litigation plan that Hemphill suggested in his pitch to the FTC.

When the FTC tried to distinguish the apps in order to put Meta in a separate market than TikTok and YouTube, the court found few differences, and even went so far as to suggest the essence of the apps was the same in their reliance on Reels to attract users.

When the FTC argued that Meta was using anticompetitive practices to monopolize Reel usage, the court pointed out that Meta has actually lost usage to TikTok.

Chief Judge Boasberg also had to interchange the price for the app for time usage to determine market share. Monopoly power can be determined by market share which in turn can be increased by monopolistic price fixing in the absence of competition. But the apps are free to use, so time was the measure, the court surmised.

Chief Judge Boasberg rounded-up the market share argument by stating that Meta’s profit margin alone did not suggest a monopoly because all the apps had extraordinary profits.

The FTC complaint stayed away from the profits earned by the apps, which are garnered from advertising, and the bidding method of pricing advertising used by on-line publishers, such as Google. The FTC complaint focussed on the acquisitions by Meta of Instagram and WhatsApp as an anti-competition practice, typically done to remove competitors and fix prices once attaining monopoly power.

Meta had argued that the purchases improved customer experience.

The court found that the Meta business model is focussed on improving the quality of advertising to make the product interesting and part of the experience of using the app as opposed to an advertising product that interrupts the experience and deters users from engaging with the app.

Users can also scroll past ads on Meta, and are not forced to pause and view the ad, if they choose not to do so.

The advancement of Artificial Intelligence (AI) has also changed the experience by accessing a larger selection of content that the user is interested in, which is determined by past user data.

The court ruled that the success of Meta Platforms, Inc was a result of innovation and not the exercise of monopolistic power developed from anti-competitive practices. The court found that Meta had invested billions of dollars in research and innovation, which benefitted users.

Chief Judge Boasberg even ogled a bit at how successful the apps have become in generating revenues, describing Meta profits as “handsome”. (Page 25)

Profits alone did not suggest monopoly power, especially when competitors had similar scaled profits over capital expenditure.

The court also dumped the FTC arguments in applying court precedents to define monopoly power.

Firstly, the Cellophone Fallacy occurs when a seller charges supracompetitive prices to mask a monopoly market. (Pages 58 and 59)

Consumers will seek alternative products, if the price is too high. One measure of monopoly power is, therefore, when a seller can attract consumers by offering products at prices near or lower than what competitors offer.

Monopolists either still make a profit by flooding the market, or ultimately increase market share by putting competitors out of business after making their products, in comparison, too expensive for consumers. This technique makes the company look competitive, but in essence, the company can only sell at a competitive price because of monopoly power.

The court discounts this theory because users are not charged for using the apps. The court does not look at the price of advertising. And the court fails to distinguish private users, who are not charged for using the app, from business users who pay to advertise on the app.

The court also throws out the Brown Shoe factors as non-applicable to the FTC case against Meta. (pages 61-76)

The battle in this test of monopolist power was again on how to define the market in which Meta operates. In this analyses, the FTC attempted to use four of the five Brown Shoe indicators to prove that Meta was in a separate market than TikTok and YouTube.

Again, if Meta was in a separate market from TikTok and YouTube, the court would have to reconsider the previous analyses, and as  result, the court might have found that Meta operated a monopoly in a smaller market by having purchased competing apps.

The court found that Meta was not operating monopoly power in a distinct market defined by (1) creating products with peculiar characteristics and users, (2) industry recognition of the distinct market, (3) differences in the way apps perform and create products, and (4) distinct consumers.

The court underscored that over the time of the litigation, since Meta’s acquisitions of  Instagram and WhatsApp, the market has become more and more competitive for the apps, with Meta suffering losses to TikTok and YouTube.

Meta even admitted to having to follow the apps and do research and innovation to become more competitive.

The court almost suggested that Meta was not able to compete with TikTok and YouTube, because those apps were better, and so, Meta could not possibly be found to have monopoly power.