Meena Alnajar is an IPilogue Writer, IP Innovation Clinic Fellow, and a 2L JD Candidate at Osgoode Hall Law School
On October 4, 2021, it was publicized that Facebook Inc. asked a judge to dismiss the U.S Federal Trade Commission’s (FTC) antitrust case that aims to force Facebook to sell Instagram and WhatsApp. The FTC initially filed a complaint that Facebook had a monopoly and requested the sale of Instagram and WhatsApp to prevent a monopoly over the social media market. Does Facebook have a monopoly over the market? Or simply a strong foothold?
What is Antitrust
The FTC’s Bureau of Competition enforces antitrust laws. These laws promote competition and protect consumers from anticompetitive mergers. The market is said to be ‘free’ and active when there is aggressive competition. This competition is productive for society because it gives consumers benefits such as lower prices, higher quality products and services, and greater innovation.
Antitrust laws try to restrain improper monopolies which are those monopolies obtained, preserved, or attempted by a firm that tried to destroy its competitors on purpose. Under section 2 of the Sherman Act, attempted monopolization is an antitrust offence if it meets certain criteria. The defendant must have employed anticompetitive practices with a specific intent to obtain a monopoly in a defined relevant market. Second, there may be a dangerous probability that a defendant will succeed in obtaining a monopoly unless there is antitrust intervention. While the FTC may appear to be blocking Facebook’s ability to maximize wealth by acquiring Instagram and WhatsApp, this FTC case may be trying to preserve the competition and economic activity in the social media marketplace. In this particular case, the FTC must define the market and that Facebook controls 60% of the relevant market.
Antitrust and Monopolies in the Tech Sphere
Social media may be a broad, general marketplace and thus fail to meet one of the criteria under Section 2. Most social networks exist in a niche, trying to provide some sort of unique service like Facebook once did, connecting people from around the world and writing on each other’s walls. This unique niche can then become a market on its own, but how exactly are these unique markets dominated by one defendant? Current suggestions focus on advertising revenue in which case Facebook does hold the majority over WhatsApp and Instagram. However, antitrust cases are few in high-tech industries, so FTC’s current complaint is difficult to compare in outcome due to limited jurisprudence.
Facebook has requested the FTC’s case be dismissed with prejudice. Facebook argues that the FTC allowed the social network’s mergers with Instagram and WhatsApp which may demonstrate a limited factual basis that Facebook engaged in an unlawful monopoly since it acted with FTC’s approval. Further, social media is a rapidly changing market and Facebook still has rapidly growing competitors including TikTok, Twitter, and Google.
People experienced the primary issue with Facebook’s mergers firsthand with the Facebook, WhatsApp, and Instagram outage on October 4, 2021. When a monopoly emerges, consumers have less choice and lose out on earnings. Consider the lost advertising revenue with influencers and companies unable to post on Instagram, or concerned loved ones who rely on WhatsApp to communicate. Perhaps if the app trifecta was separated, the outage would not have affected us at all. However, Facebook is a corporation, and corporations aim to maximize wealth. The FTC once agreed with this when it approved Facebook’s purchases of Instagram and WhatsApp in the first place. It may be hard for the FTC to go back on their word and undo these billion-dollar deals.