The FTC's survey expert, Michal Malkiewicz, backs up the government's case with data. But first, current WhatsApp head Will Cathcart, and the start and end of two more exams on Day 15.
I love the subtle reference to Being John Malkovich! One of my favorite movies. It made me think how Being John Malkovich is a glimpse into the social media mind. A puppeteer finding a magic door that once you go through you end up in the mind of John Malkovich, social media is a puppeteer finding millions of doors that leads to the minds of millions of different people!
I don't agree that extending a monopoly from one product into market power in another product is always illegal. Monopoly leveraging is one way to style this theory, and it's a hard one to prove. Another way of thinking about it is as a "tying" claim, but that requires a "condition linked to a sale" -- even for tying "per se," a test that if met results in a finding of illegality even before reaching procompetitive justifications. You still need to prove that some other product market is being monopolized unlawfully.
I agree as a practical matter though that today's antitrust law and its focus on defining narrow product markets seems to make it hardest to hold the biggest firms accountable, because they have potentially monopolized so many adjacent and mutually reinforcing markets.
Two answers. One, it's possible for two firms to compete in some product markets but not others. You might consider car companies that have entry-level, standard, and luxury models as an example. It's possible for a car company not to compete with a premium model but still to offer a competitive entry-level alternative. Does it matter for defining market power in the luxury market that two car companies compete in the budget market? Maybe, if it's possible for the competitor to enter the luxury market and expand output quickly to meet demand. Second, even setting aside different products, it's possible to compete in a broader market but not in a narrower one. And in antitrust, we're focused on finding the narrowest relevant product market. At the level of time and attention, all consumption that requires time and attention competes. But that is a level of abstraction not too useful for defining the narrowest market. In personal social networking, it seems like the evidence is showing that TikTok isn't designed to do that, even if there are some superficial similarities between the features. (And also important to distinguish a product from features. Firms can also be in the same product market and their products might compete on features as a measure of quality - this is called differentiation. Firms with highly differentiated products might enjoy some modest market power in the sense that they are price makers instead of price takers.) But Meta could still argue that TikTok may move into social networking and thus it is constrained by TikTok within the narrower market from the potential threat.
And to me, that last point is where you have to reach some contradictory conclusions for the FTC to win. You have to believe that Instagram and WhatsApp were going to expand in the personal social networking market, but you have to disbelieve that TikTok or YouTube did or will.
I believe Instagram is in the PSN market and always has been. It was always friends and family following friends and family before you could even follow people you did not know.
I agree that it is a stretch to say Whatsapp, Youtube, and Tiktok would have been or ever will be a competitor to Facebook and Instagram.
But to me this case was always about Facebook buying Instagram. To me that is Pepsi buying Coke.
To me thats the violation of antitrust here.
So why wouldn't the FTC win on Instagram?
And can the FTC win on Instagram and lose on Whatsapp?
Cant it be that at the time of the mergers and before the ascention of Tiktok in the US market, Meta and its products were really competing in the PSN market and now they are just trying to use this probably unlawfully gained monopoly power to dominate the non PSN market (failing quite a bit) and on the other hand non PSN market participants like TikTok trying now to tap in to the PSN market? So the two markets are "close" to each other but different
Yes, although it's not clear to me that TikTok is trying to expand into the PSN market. It has some social sharing features like direct messaging. But its executives keep saying it's not a social network. Its whole differentiated feature is the AI algorithm which is based around content instead of mutual connections.
I love the subtle reference to Being John Malkovich! One of my favorite movies. It made me think how Being John Malkovich is a glimpse into the social media mind. A puppeteer finding a magic door that once you go through you end up in the mind of John Malkovich, social media is a puppeteer finding millions of doors that leads to the minds of millions of different people!
Thanks for your great reporting.
I keep asking this question in different ways.
Doesn't it matter whether Meta was allowed to put REELS into Facebook and Instagram in the first place?
They owned a monopoly in social networking with these two apps.
There was no entertainment short video clip app called Tiktok in 2012.
Can Meta extend their monopoly apps in social media (before Tiktok) to extend into Tiktok's space?
Extending a monopoly is illegal.
How is that not being discussed?
Thank you.
I don't agree that extending a monopoly from one product into market power in another product is always illegal. Monopoly leveraging is one way to style this theory, and it's a hard one to prove. Another way of thinking about it is as a "tying" claim, but that requires a "condition linked to a sale" -- even for tying "per se," a test that if met results in a finding of illegality even before reaching procompetitive justifications. You still need to prove that some other product market is being monopolized unlawfully.
I agree as a practical matter though that today's antitrust law and its focus on defining narrow product markets seems to make it hardest to hold the biggest firms accountable, because they have potentially monopolized so many adjacent and mutually reinforcing markets.
Thank you for your expertise.
Does it matter to the market definition that Tiktok does not have a PSN?
Can Meta compete with Tiktok and declare Tiktok a competitor of Meta even if it does not have a PSN on its app?
Two answers. One, it's possible for two firms to compete in some product markets but not others. You might consider car companies that have entry-level, standard, and luxury models as an example. It's possible for a car company not to compete with a premium model but still to offer a competitive entry-level alternative. Does it matter for defining market power in the luxury market that two car companies compete in the budget market? Maybe, if it's possible for the competitor to enter the luxury market and expand output quickly to meet demand. Second, even setting aside different products, it's possible to compete in a broader market but not in a narrower one. And in antitrust, we're focused on finding the narrowest relevant product market. At the level of time and attention, all consumption that requires time and attention competes. But that is a level of abstraction not too useful for defining the narrowest market. In personal social networking, it seems like the evidence is showing that TikTok isn't designed to do that, even if there are some superficial similarities between the features. (And also important to distinguish a product from features. Firms can also be in the same product market and their products might compete on features as a measure of quality - this is called differentiation. Firms with highly differentiated products might enjoy some modest market power in the sense that they are price makers instead of price takers.) But Meta could still argue that TikTok may move into social networking and thus it is constrained by TikTok within the narrower market from the potential threat.
And to me, that last point is where you have to reach some contradictory conclusions for the FTC to win. You have to believe that Instagram and WhatsApp were going to expand in the personal social networking market, but you have to disbelieve that TikTok or YouTube did or will.
I believe Instagram is in the PSN market and always has been. It was always friends and family following friends and family before you could even follow people you did not know.
I agree that it is a stretch to say Whatsapp, Youtube, and Tiktok would have been or ever will be a competitor to Facebook and Instagram.
But to me this case was always about Facebook buying Instagram. To me that is Pepsi buying Coke.
To me thats the violation of antitrust here.
So why wouldn't the FTC win on Instagram?
And can the FTC win on Instagram and lose on Whatsapp?
Thank you again for your knowledge.
Cant it be that at the time of the mergers and before the ascention of Tiktok in the US market, Meta and its products were really competing in the PSN market and now they are just trying to use this probably unlawfully gained monopoly power to dominate the non PSN market (failing quite a bit) and on the other hand non PSN market participants like TikTok trying now to tap in to the PSN market? So the two markets are "close" to each other but different
Yes, although it's not clear to me that TikTok is trying to expand into the PSN market. It has some social sharing features like direct messaging. But its executives keep saying it's not a social network. Its whole differentiated feature is the AI algorithm which is based around content instead of mutual connections.