TAMING BIG TECH

In fast-moving markets, prevention is better than cure, which is why intervening early to block illegal mergers must be the norm, not the exception

- Madhavi Singh

When a US federal judge ruled in late November that Meta does not maintain an illegal monopoly in social media, it was a reminder that even the strongest evidence can look weak when enforcers act too late.

Rejecting the US Federal Trade Commission's narrow market definition, the court instead concluded that Meta, formerly known as Facebook, competes against a broad array of rivals such as TikTok and YouTube. While legal scholars can and will dissect the opinion, the biggest takeaway is that timing matters in dynamic markets, implying that antitrust authorities must develop a preventive approach, rather than relying solely on reactive measures.

The case centered on Facebook's acquisitions of Instagram in 2012 and WhatsApp in 2014, when both were unmistakably competitive threats. Facebook said so itself: internal emails and strategy documents spelled out its intention to copy, acquire, or neutralize rivals, while the firm's leaders explicitly acknowledged the existential threat posed by Instagram. FTC lawyers rarely uncover this type of smoking-gun evidence.

But the case collapsed under the weight of today's market reality. Instead of considering the world as it existed when the mergers occurred, the court (incorrectly) cited the rise of TikTok, Snapchat, and YouTube Shorts as evidence that Facebook lacked monopoly power. But TikTok's success hardly disproves Facebook's earlier dominance, because ByteDance, its parent company, spent vast sums on user acquisition, at one point becoming one of the largest buyers of ads on Facebook, Instagram, and Snap in the United States. A Chinese company with almost unlimited capital breaking into the market is hardly proof of healthy competition.