FTC v. Meta: The Importance of Quantitative Evidence in Antitrust

The authors, who were retained as experts and consultants on behalf of Meta, explain how field experiments, natural experiments, and merger simulations ultimately convinced the court to rule in Meta’s favor, and what the decision means for the future of antitrust enforcement.

This article was originally published by Competition Policy International here. The views expressed in this article are the sole responsibility of the authors and cannot be attributed to Compass Lexecon or any other parties.

Summary:

The Federal Trade Commission (“FTC”) brought an antitrust lawsuit against Meta in 2021, claiming that Meta’s acquisitions of Instagram and WhatsApp had allowed it to monopolize a relevant market for apps providing “Personal Social Network Services” and that consumers had been harmed because the acquisitions allowed Meta to increase ad loads imposed on Facebook and Instagram app users. However, the FTC’s market definition was not based on quantitative evidence and its assertion of harm ignored the two-sided nature of the Meta platforms, which makes it impossible to determine whether a merger would increase ad loads based on theory alone. In contrast, Meta’s economic experts used modern theoretical and quantitative tools of economic analysis to address market definition and competition issues. This paper summarizes the field experiment, natural experiments, and related quantitative analyses presented by Meta’s economic experts that demonstrated the FTC’s market definition excluded apps that were closer substitutes to Meta’s apps than the included apps. The paper also summarizes the results of a de-merger simulation that accounted for the two-sided nature of apps and was based in part on the results of the field experiment. That analysis demonstrated that the FTC’s claim that the acquisitions had led to increased ad load was not supported by the data.