This is the next step in the FTC’s troubles. After defining the market, it must prove that Facebook has market power. If you take only one thing from this article, it is this: in antitrust law, having market power, also called monopoly power, does not just mean that a company is really big or influential. Market power has a specific technical meaning: the ability to increase prices (or decrease quality) over a long period of time without losing customers in the competition.
A common way of demonstrating market power is to simply show that a company controls a large amount of market share. This method, called circumstantial evidence, is the method adopted by the FTC in its December filing. There is only one problem. The sum of the evidence it provides claims that Facebook “maintains a dominant share (more than 60%) in the US personal social networking market.” Boasberg’s views understandably blame the agency for this. Where did the 60% number come from? Sixty percent, what exactly is it? (Users? Revenue? Time spent on the platform?) If Facebook doesn’t have any other major competitors, who makes up the remaining 30% to 40%? “These allegations-without even providing actual estimates or ranges of Facebook’s market share at any time in the past decade-ultimately cannot reasonably prove that Facebook has market power,” Bosberg wrote. “It’s almost like the agency’s traditional view that the court would simply recognize Facebook as a monopolist.”
According to Rebecca Allensworth, an antitrust scholar at Vanderbilt Law School, the Federal Trade Commission may have good reasons to try this approach. The antitrust laws of the past few decades have established narrow technical tests for winning monopoly cases, and this principle is not designed for modern Internet companies. The FTC may have been betting that resorting to common sense will be more effective than more technical economic arguments.
“This is a trade-off between proposing arguments that are in line with the complex case law that has developed over the past 40 years and proposing very intuitive and realistic arguments,” she said. “If we take a big step back, the final question we have to ask is,’Does this company have influence on the market? Does this company have the right to decide what consumers get and what they don’t get, and who is allowed to compete, Who can’t compete, or do they really feel competition from other people? I think from this perspective, this is what the whole case should be. Facebook clearly has monopoly power.”
The fact that Boasberg did not accept this idea did not doom the FTC case. The judge gave the agency 30 days to provide actual evidence that Facebook has market power. His view went one step further, making it clear that the remedy proposed by the FTC—forcing Facebook to sell Instagram and WhatsApp—is still on the table.
“I don’t think the court will do this unless it is seriously considering resubmitting the complaint to pass the dismissal motion,” said Denver’s antitrust lawyer Paul Swanson. “The court clearly gave them another opportunity to defend against market forces; they just need to do this explicitly.”
So how does the Federal Trade Commission strengthen its arguments in the second round? One way is to enrich the indirect evidence of market share. Swanson said the agency has done most of the heavy lifting. Boasberg has accepted its proposed market definition, which excludes all other large social platforms except Facebook’s Instagram. Therefore, it is not difficult to convince him that Facebook has an absolute advantage in this market. The agency may just need to explain it more clearly and explain the data it relies on.