The Failure of the FTC’s Meta Lawsuit
- WULR Team
- 4 days ago
- 5 min read
How did the Federal Trade Commission's lawsuit fail to prove a monopoly?
Published March 15th, 2026
Written by Nick Tarantino
In the public imagination, Meta towers over the digital world: a company that commands attention, shapes culture and buys its way out of competition. According to Antitrust law, however, monopolization requires something more concrete. That gap came into sharp relief when the Federal Trade Commission’s high-profile case against Meta collapsed, not because the law could not keep up with the contemporary tech industry, but because the government could not prove the company had monopoly power at all.
To demonstrate the FTC’s failure and to evaluate whether the legislation and its interpretation adequately address the anti-competitive concerns with big tech, it is helpful to understand how a monopoly is traditionally defined and how a social media company’s conduct could conform to that definition. To prove a violation under Section 2 of the Sherman Act, one must show that a firm has monopoly power in a defined, relevant market and is maintaining or acquiring that power through exclusionary, anticompetitive conduct, according to the FTC’s guidance. Proving a firm’s conduct is straightforward, but proving it has monopoly power in a specific market is less so. The usual first step is to define the relevant market. A plaintiff typically aims to prove that the market is as small as possible because it is easier to show monopoly power in a small market. A court defines a relevant market by identifying the product market and the geographic market. In the Meta case, the geographic market was clearly and uncontroversially defined as the United States. The product market was the subject of contention. One firm selling pencils and one selling pens clearly compete in some way because they are similar products, but how do we compare the similarity of different social media platforms?
This issue is solved with another rule that does not compare products superficially but looks for substitutes: products that consumers see as reasonable alternatives. Substitution is the idea that if one product becomes less attractive, consumers will switch to another product instead. If consumers readily switch from Product A to Product B when prices change, for example, the two belong in a shared product market. If they do not, the products occupy separate markets. In a U.S. District Court ruling, the DOJ successfully proved the latter by showing that other services — such as Amazon, Yelp, TikTok or social-media platforms — were not meaningful substitutes for general search services. The court accepted evidence that users do not migrate away from Google when using those platforms and that the services perform fundamentally different functions. As a result, the court agreed that “general search services” constitute a distinct product market from social media, vertical search providers and other query-response tools.
Meta’s products, by contrast, did not constitute their own market. The FTC insisted that Facebook and Instagram operated in a narrow “personal social networking” market, but the evidence told a different story. Judge Boasberg agreed with the defendant that users no longer relied on Meta’s platforms primarily to see friends’ posts. Instead, they spent the vast majority of their time consuming short-form video recommended by algorithmic feeds—functionally identical to TikTok and YouTube Shorts. When those apps surged in popularity, users shifted time to other apps accordingly. Internal Meta documents, industry testimony, advertiser behavior and engagement metrics showed that Facebook, Instagram, TikTok and YouTube all competed head-to-head for the same user attention.
With this broadly defined market, the FTC had a herculean task proving the second requirement for a Sherman Act violation: an exercise of monopoly power in that market. Evidence of monopoly power can appear in the form of exorbitant prices or an inordinate market share. The DOJ used the latter in Google’s case (among other evidence) and successfully demonstrated Google's exercise of monopoly power in the search services market. In Meta’s case, the FTC, which could not prove Meta had sufficient market share under the broad market definition, opted to prove that Meta charged exorbitant prices. This raises another question: how does a firm offering a free product like Facebook or Instagram jack up its prices? The FTC could never prove Meta raised its prices because the price has always been the same. They argued that degrading the product's quality while maintaining the same price is equivalent to a price increase. The court entertained this relatively new method of identifying a price increase for a free product. Where the FTC failed, though, is in their attempt to identify a decrease in quality. They defined quality by the frequency of ads, but this simple proxy did not align with the surveys of consumer sentiment. Moreover, they failed to show a general increase in ads on Meta’s platforms. Clearly, the FTC’s unique methods for demonstrating the relevant market and proving Meta’s exercise of monopoly power accorded with the written law and the courts' interpretation thereof. The FTC’s inability to prove a violation was not due to the law, as these ostensibly antiquated laws appear felicitous to the burgeoning tech markets. The government simply lacked evidence for its claims, as Judge Boasberg noted in his opinion.
Why, then, did the FTC bring a lawsuit without any evidence? The impetus for the lawsuit can be understood by looking at the political climate in which it was filed. In 2020, Facebook occupied a unique position in American politics. One article from The Guardian covers Facebook’s fallout from the Cambridge Analytica scandal, years of congressional scrutiny over misinformation and election interference and growing criticism from both political parties. Public sentiment at the time strongly reinforced this position. Pew Research found that most Americans believed that social media companies had too much political power and exerted an unhealthy influence on society. Users worried about privacy abuses, data collection, algorithms and perceived bias in content moderation. Within that climate, the idea that Facebook should be “reined in” had already taken hold.
Congress addressed these concerns in part during the July 2020 antitrust hearing, where Zuckerberg joined Jeff Bezos, Sundar Pichai and Tim Cook for one of the most aggressive examinations of Big Tech power to date. According to NPR, lawmakers pressed Zuckerberg on internal emails about buying Instagram to neutralize a competitor, questioned Facebook’s practice of using data from its Onavo app to identify emerging rivals and framed the company’s acquisitions as a deliberate strategy to choke off competition before it could form. The hearing also blended competition concerns with deeper grievances about misinformation, content moderation, political influence and platform responsibility. For Republicans, the antitrust lens served as a vehicle for complaints that had little to do with competition. Viewed in this way, these pressures on the FTC may have motivated the now obviously ill-suited argument.
The lawsuit against Meta brought by the FTC demonstrates that the broader public’s frustration with Big Tech cannot be channeled through antitrust doctrine. The lawsuit unfolded during a period of intense scrutiny of social-media platforms, and it is understandable that policymakers and agencies looked for ways to respond. The harms people associate with Big Tech, however, are not the kind of injuries antitrust law is designed to address. Antitrust statutes ask narrow economic questions, and on those terms, the FTC’s case fell short. If lawmakers want to confront the distinct problems created by large digital platforms, it will likely require legislation tailored to those issues, not antitrust.
