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This is the next step the FTC has had problems with. Once the market was defined, Facebook had to show that it has market power. If you remove only one thing from this article, let it be this: In antitrust law, having market power, also called monopoly power, does not mean that a company is really big or has a big influence. Market power has a specific technical meaning: the ability to raise prices (or reduce quality) without losing customers to competition in the long run.
A common way to show power in the market is to show that a company controls a massive share of the market. This approach, known as indirect evidence, is presented by the FTC in December. There is only one problem. The sum of the evidence it offers is that Facebook “remained in the U.S. personal social media market (over 60%).” Boasberg’s views are understandable to catching the agency on coal. Where does the 60 percent figure come from? What 60%, exactly? (Users? Revenue? Time spent on the platform?) If Facebook has no other major competitors, who makes up the remaining 30-40 percent? “These allegations – which don’t even provide a true figure or range of Facebook’s market share over the last ten years – ultimately stop Facebook from believing that it has market power,” Boasberg wrote. “Almost every agency expects the Court to gesture the usual wisdom that Facebook is a monopolist.”
According to Rebecca Allensworth, an anti-monopoly expert at Vanderbilt Law School, the FTC may have a good reason to test that view. The last few decades against monopoly have established strict technical tests to win a case of monopolization, and the doctrine is not designed with modern Internet companies in mind. The reasonable appeal at stake for the FTC was that it would work better than a more technical economic argument.
“It’s a trade-off between making an argument that falls within the intricate set of jurisprudence that has grown over the last 40 years or making an argument that is very intuitive and realistic,” he said. “If we take a big step forward, the last thing we’re asking is,‘ Does this company have power in the market? Does this company have the power to decide what consumers receive and what they don’t, who will compete and who doesn’t, or really bite the competition of others do they feel it? ‘From that point of view, I think it’s about the whole case, Facebook is clear about the strength of the monopoly.’
Boasberg’s failure to buy that mindset does not condemn the FTC’s case. The judge gave the agency 30 days to return with real evidence to suggest Facebook’s strength in the market. And his opinion goes one step further, explicitly saying that the FTC’s proposed remedies — forcing Facebook to sell Instagram and WhatsApp — remain on the table.
“I don’t think the court will do that unless it seriously raises a renewed complaint that would go beyond a motion to dismiss it,” said Paul Swanson, a Denver monopolies attorney. “The court makes it quite clear to them to claim market power; they have to do it explicitly.”
So how can the FTC strengthen its argument about its second argument? One way is to flesh out indirect evidence of market share. Swanson suggested that the agency has already carried the heaviest weights. Boasberg has already agreed to the proposed market definition, which excludes all other major social platforms other than Instagram, which owns Facebook. So it wouldn’t be hard to convince Facebook that it has a major stake in that market. The agency should perhaps be more explicit about this and explain what data it is based on.
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