One of the worst aspects of the “neo-Brandeisian” approach to antitrust pursued by former Federal Trade Commission (FTC) Chair Lina Khan was the definition “relevant markets.” The FTC tried to define the relevant markets for targeted companies as narrowly as possible. These narrow definitions usually bore little relation to market realities and were an attempt to make it easier for the FTC to win in court. For example, the FTC’s success in blocking the merger of grocery chains Albertson's and Kroger depended on the agency’s success defining the relevant marketplace as “traditional grocery stores.” This meant the two chains did not compete with big box stores like Wal-Mart or Costco—even though Wal-Mart is the leading grocery retailer in America!
The practice of redefining relevant markets to increase chances of victory was one reason many in the business community felt relieved when Donald Trump returned to the Oval Office. Unfortunately, Andrew Ferguson, Khan’s replacement as FTC Chair, is not only continuing the FTC’s misguided antitrust case against Meta (parent company of Facebook, WhatsApp, and Instagram), he is allowing the agency to continue using overly narrow market definitions. The FTC defines Meta’s relevant market as consisting of personal social networking services. These are defined as “online services that enable and are used by people to maintain personal relationships and share experiences with friends, family, and other personal connections in a shared social space.”
According to the FTC, personal networking services have three distinct characteristics: First, personal social networking services are built on a social graph that maps the connections between users and their friends, family, and other personal connections. Second, personal social networking services include features that many users regularly employ to interact with personal connections and share their personal experiences in a shared social space, including in a one-to-many “broadcast” format. Third, personal social networking services include features that allow users to find and connect with other users, to make it easier for each user to build and expand their set of personal connections.
A site must have all three characteristics to be considered a personal social networking site and thus a competitor of Meta. This allows the FTC to claim that YouTube, TikTok, and other popular social media sites do not compete with Meta. The FTC says sites like YouTube and TikTok are used primarily to post, view, and share videos—not connect with family and friends. Of course, people do connect with family and friends, as well as make new friends on TikTok. Anyone who thinks social media users use these sites to passively view content needs to familiarize themselves with the comment section.
The FTC also does not consider sites like Reddit that allow mostly anonymous users to join communities with others who share a particular interest as competing with Meta. Instagram began as a video sharing app and, while it now offers a variety of features, including messaging, it is still mainly used to share pictures and videos. Yet it is considered a personal social networking service while TikTok is not, even though the major difference between the two is that Instagram is owned by a top target of the FTC.
Most social media users and employees would say that Meta’s relevant market is that of social media sites, broadly defined as platforms people use to connect with friends and family; to view, watch, or share content with both existing and new friends; or just for one’s own entertainment and education. When Meta’s relevant market is defined as social media in general, it is clear that Meta does not enjoy anything close to a monopoly. If Meta were a monopoly, Facebook and Instagram would not have began emphasizing their short-form video features in an effort to keep users from abandoning them for TikTok.
Instead of furthering Lina Khan’s practice of creating relevant markets that bear no relation to reality in order to increase the odds of winning, FTC Chair Ferguson should determine relevant markets based on how businesses and consumers view them. Doing so would help Ferguson fulfill his promise to end Lina Khan’s war on businesses and encourage mergers and acquisitions that can benefit workers and consumers as well as investors.
