Will Court Kick Lina Khan’s Case Against Meta’s to the Curb – Again?

April 5, 2024

What constitutes a market? Define it narrowly enough, and progressive antitrusters can find a monopoly anywhere. Draw lines around a market for “chicken sandwiches not sold on Sunday,” and you can charge Chick-fil-A with being a monopoly. Define a market for red-headed comedians who rely on props and you can charge Carrot Top … Okay, go ahead and charge Carrot Top. But you get the point.

The Department of Justice, in its recent filing against Apple, had to define a narrow market for “performance smartphones” to support its case against the maker of the iPhone. The Federal Trade Commission’s case against Meta is similarly for monopolizing the, uh, “personal social networking services” market that consists of four firms – Meta-owned Facebook and Instagram, as well as Snapchat and MeWe. The contention is that Meta is unfairly dominating this market with two of the Big Four. Add in Meta-acquired WhatsApp and you have the Paris Hilton version of John D. Rockefeller.

Unexplained in this case is why the FTC slices out social media services that also provide personal social networking, such as YouTube, X/Twitter, TikTok, Mastodon, iMessage and a host of other services I’m too old to know about.

On Friday, Meta filed its second motion for summary judgment asking a federal appeals court to have the cleaning crew throw this one out with the trash. Such motions rarely succeed but I think this one has a decent chance. Meta makes a compelling case in today’s filing.

Meta demonstrates that far from there being a tight, four-firm market for personal social networking, when consumers migrate they are more likely to go to YouTube and TikTok than to any one of the cited four. This is just one way in which Meta schools FTC on how to use quantitative analysis to define a market, instead of just making assertions and backing it with rhetoric. But what do you expect when Chair Khan prefers to make unfounded assertions instead of relying on the 80 economists on her staff to perform an actual analysis.

This lack of substance is the visible part of what one FTC official alluded to, in a memo recently released by a House investigative committee, when he wrote: “I’m not sure being successful (or doing things well) is a shared goal, as the chair wants to show that we can’t meet our mission mandate without legislative change.”

Meta details a host of other problems with FTC’s complaint. For example, the agency asserts that Meta exploits more than a 60 percent share of its personal social networking services market so it can act as a monopolist. What do monopolists do? They set monopoly prices. What are the prices consumers pay for Facebook and Instagram? Zero. Monopolists also force innovation to suffer. But dozens of apps keep expanding their services for communications and multimedia sharing.

Finally, FTC has no evidence that exclusionary conduct exists that has restrained the robust, vibrant, expanding, often irritating world of silly clips and personal networking. Instead, it all just keeps coming. Besides, there is no metric for assessing the quality of shorts of babies trying bacon for the first time.

What should disturb us most about FTC’s case, and the overall direction of progressive antitrust, is that regulators purport to be able to predict unfolding social and technological realities with a precision that eludes tech practitioners, social media experts and investors with a lot of skin in the game. Progressive lawyers somehow see a multiverse in which everything simply would have been better if Meta had never acquired Instagram or WhatsApp.

An earlier permutation of FTC’s Meta complaint was previously booted out by the courts in 2021. Lina Khan climbed back in, refiling her case with amendments to reduce its embarrassing lack of substance. That case survived Meta’s first motion to dismiss. This one may have legs, however.

There’s gotta be a better reason to kill trees.