‘Monopoly’ Facebook Is Losing Ground

By Robert H. Bork Jr.Oct. 31, 2021 5:41 pm ET

Teens are shifting from Instagram to TikTok even as critics claim the company has few competitors.

The leak of Facebook’s internal documents is Exhibit A for those who would indict the social-media giant as the modern equivalent of a greedy railroad monopoly. But as the Biden administration’s antitrust zealots celebrate finding evidence of predatory algorithms, they overlook an inconvenient revelation from the documents: Facebook is a social-media geriatric losing ground to its competitors.

According to the documents, Facebook is alarmed by how fast its pipeline of new users is drying up. The use of the Facebook app by young adults is expected to drop 4% in the next two years, and a 45% decline among teens. What about Facebook-owned Instagram? Doesn’t that app bring in the young users, while older people use Facebook? It turns out Instagram is showing its age as well, as teens migrate in large numbers to TikTok and Snapchat.

Facebook’s bad press is beginning to differentiate the company and not in a good way. At a congressional hearing last week, executives from TikTok, Snap and YouTube detailed the ways their algorithms and services are different from Facebook’s in protecting kids from toxic messages and harmful influences.

Not since Big Tobacco’s disastrous 1994 hearing has a company alienated so many people. Liberals believe Facebook’s algorithms exacerbate violent extremism. Conservatives are angry at content-moderation decisions that seem to always go against them. The American Academy of Pediatrics blames the platform for “Facebook depression” in children.

Facebook CEO Mark Zuckerberg announced on Thursday he was renaming his company Meta with the goal of creating a virtual-reality “metaverse” of gaming, conferencing and shopping. Mr. Zuckerberg’s announcement had the feel of someone desperate to change the subject.

These developments couldn’t be less convenient for the Federal Trade Commission’s attempts to frame Facebook as a monopoly. Last year FTC had filed an antitrust lawsuit against Facebook, even though young users aren’t buying what Facebook offers, even at a price of zero. The FTC also claimed that Facebook had harmed competition and protected its monopoly by acquiring Instagram and WhatsApp, even though the agency itself had allowed these acquisitions to move forward. Judge James E. Boasberg dismissed the case, noting that it made a “naked allegation” that Facebook has a dominant market share of the “personal social networking” market, without defining that market.

The FTC has since attempted to define the personal social-networking market more clearly in this antitrust lawsuit refiled under the direction of the new chairman, Lina Khan. But the new definition excludes TikTok, Twitter and other popular services arguing that those platforms are about sharing content, though they also allow people to make and follow friends—Facebook’s basic innovation.

Antitrust enforcers are ignoring lessons of the past. The Justice Department sued IBM in 1969 for monopolizing the market for “general purpose digital computers.” By the time the case was dismissed for lack of merit in 1982, the market had dramatically shifted toward personal desktop machines, and IBM was a late entry. Tim Wu, the White House adviser on technology and competition policy, credits the lawsuit’s “policeman at the elbow” effect with restraining IBM and giving competitors including Apple space to emerge. But my father, Yale Law School professor Robert Bork, called the case “the antitrust division’s Vietnam.”

That division, if I may extend the metaphor, met its Iraq when the Trump administration directed it to file a lawsuit against AT&T for its merger with Time Warner. It made political sense for Mr. Trump, given his feud with CNN, then owned by Time Warner. Soon after a federal judge ruled the merger legal, AT&T gave its shareholders a jolt when it unloaded the company (rebranded WarnerMedia) for roughly half of what it had paid. The telecom company’s executives apparently realized they had no business trying to manage content companies.

This experience bears out the defect with progressive antitrust theory: If AT&T can lose billions on a bad acquisition, how can government experts forecast the future impact of today’s business decisions? The consumer and the market eventually correct in ways beyond human prediction, and that‘s what they’re doing to Facebook.

Mr. Bork is president of the Antitrust Education Project.