In recent years, the Federal Trade Commission (FTC) and the Department of Justice (DOJ) have undergone significant transformations in how they view their regulatory missions. Inspired by neo-Brandeis ideology and the naive belief that contemporary problems require a strong government hand to guide market processes, the agencies have increasingly pivoted from a focus on consumer welfare to a broader focus on squashing mergers.
In practice, this means the FTC and DOJ are challenging a record number of acquisitions. Unfortunately, these court challenges often incorrectly define the market in question. Two major cases currently before the courts exemplify this trend. They include an FTC lawsuit against Meta and a DOJ lawsuit against Google. The outcome of each could have enormous implications for the consumer market, so it is important to set the record straight.
The Meta case dates back to 2020, when the FTC first sued the technology company for allegedly illegally monopolizing the personal social networking services (PSNS) market following its acquisition of Instagram in 2012 and WhatsApp in 2014. While that initial claim was rightly dismissed due to the commission’s failure to present sufficient evidence, an amended version of that complaint was later allowed to proceed.
The crux of the FTC’s original lawsuit remains unchanged–that Meta unlawfully acquired and now maintains a PSNS monopoly. As a result, Meta has asked the court to dismiss the lawsuit, correctly noting that the recent discovery phase turned up no new evidence that would justify government intervention.
Separately, the DOJ filed a lawsuit against Google in late January, arguing that Google subverted competition in digital advertising technologies, known collectively as “ad tech stack,” by engaging in anticompetitive and exclusionary conduct. Like the FTC’s lawsuit against Meta, the DOJ argues previous acquisitions, including DoubleClick in 2008 and AdMeld in 2011, have allowed Google to dominate the marketplace and suppress alternative technologies that may otherwise have been adopted by publishers, advertisers, and competitors.
In both cases, the regulatory agencies have sought relief on behalf of the American public and demanded that all problematic acquisitions be undone. Aside from the obvious practical challenges of unwinding acquisitions that occurred over a decade ago, the FTC and DOJ have based their requests on narrow market definitions that incorrectly diagnose the state of competition.
For example, while the FTC has accused Meta of maintaining a monopoly over the PSNS market, it defines this market as only including Facebook, Instagram, MeWe, and Snapchat. Strangely absent are other platforms like X (Formally Twitter), TikTok, and YouTube. In fact, according to security filings, at least 184 companies state that they compete in this market. While the FTC says that it has excluded some of these platforms from its market definition because their purpose is not directly tied to social networking, this argument ignores the reality that many consumers use these platforms interchangeably and for various reasons.
The DOJ also uses a narrow market definition for digital advertising technologies, arguing that Google’s previous acquisitions have given it monopoly power over advertising tools, servers, and exchange platforms. However, Google is just one of many companies that utilize ad placement. Just last year, Microsoft acquired advertising company Xandr from AT&T, which allowed it to later partner with Netflix to launch a new low-cost streaming plan.
Other companies like Amazon, Comcast, Target, and Walmart also operate in the advertising space, as do a growing number of specialized advertising technology companies like Criteo, OpenX, and The Trade Desk. The idea that Google has squashed competition is farfetched. All evidence points to a market that is becoming more competitive, not less.
In their haste to define markets narrowly, the FTC and DOJ have also ignored some basic truths. First, the agencies seem to have forgotten that it is perfectly reasonable, even expected, for companies to pursue profit-making entrepreneurship in their business endeavors. Anything less would be a disservice to their employees, shareholders, and the consumers they serve. Second, people willingly use Meta and Google services because they like them, not because they are required to use them.
Last, it’s worth remembering that the FTC and DOJ previously allowed Meta and Google’s acquisitions to proceed. Only years later have these regulatory agencies changed their tune, generating unnecessary confusion for the market and needlessly discouraging other businesses from making similar business ventures.
Federal agencies like the FTC and DOJ would do well to return to a consumer-centric approach to antitrust enforcement that focuses on legitimate consumer harms rather than every new Big Tech acquisition.
