The U.S. District Court for the District of Columbia recently entered judgment in favor of Meta Platforms Inc. (Meta) in a high-profile antitrust case addressing the boundaries of monopoly power in rapidly evolving digital and social media markets. Judge James Boasberg presided over a nearly seven-week trial that centered on whether Meta's acquisitions of Instagram and WhatsApp in 2012 and 2014, respectively, constituted unlawful monopoly maintenance in the "personal social networking" (PSN) market.
The court's opinion focused heavily on the role of TikTok and YouTube as transformative competitors, finding that the PSN market has changed dramatically in recent years. Even if Meta in the past possessed market power in a PSN market, the court made clear that antitrust liability turns on present market realities, not historical dominance – and the evolution of Meta's focus away from friends and family sharing to something closer to and in close competition with TikTok and YouTube meant that it no longer held a monopoly it could illegally maintain. In today's world where digital and technological advancements produce rapid and dramatic changes in the way businesses operate, this decision demonstrates challenges that plaintiffs (whether governmental or private) will face in pursuing monopolization claims. As major antitrust cases take years to make their way through the courts, markets at issue may have changed dramatically and, as in the Federal Trade Commission's (FTC) challenge to Meta's alleged PSN monopoly, the whole purpose for the case might disappear.
Background
This lawsuit, initiated by the FTC alongside 46 states, the District of Columbia and Guam on Dec. 8, 2020, alleged that Meta holds monopoly power in the U.S. PSN market and that it sought to systematically eliminate competitive threats to its dominant position by acquiring Instagram for $1 billion and WhatsApp for $19 billion. The case sought to force Meta to divest Instagram and WhatsApp and argued that Meta's "buy-or-bury" strategy prevented other platforms from becoming meaningful rivals and that such actions violated Section 2 of the Sherman Act.
After more than four years of litigation, the case went to trial on April 14, 2025.
FTC's Arguments
The FTC argued that the relevant antitrust market for Meta's purported monopoly should be defined as "personal social-networking ('PSN') services." This narrow framing was central to the FTC's argument: If other social networking companies such as TikTok or YouTube were included, Meta's market position would appear far less dominant. According to the agency, the PSN market consisted only of Meta (Facebook), Instagram, Snapchat and MeWe – applications where it argued sharing between friends and family was the "core" function. By contrast, the FTC attempted to characterize TikTok and YouTube primarily as entertainment platforms, distinct from the personal-sharing focus of PSN services.
The FTC further argued that Meta's "buy-or-bury" strategy in acquiring Instagram and WhatsApp was part of an illegal scheme to maintain its monopoly in PSN services by neutralizing emerging rivals or significant competitive threats. In the agency's view, this strategy stifled the development of rivals to Meta, decreased the quality of and slowed innovation in products and features, and narrowed consumer choice. To demonstrate harm to consumers in decreased product quality, the FTC pointed to heavier advertising loads and weakened privacy protections and argued that independent competitors could have provided safer and more innovative models of social networking.
Meta's Defense
Meta focused its defense on the FTC's market definition, arguing it was artificially narrow and ignored competition from TikTok, YouTube and others, which held substantial market shares. Meta presented evidence that consumers regularly substitute time on Facebook and Instagram with platforms such as TikTok and YouTube, which offer users many of the same features available on Meta's platforms.
To establish that its services competed directly with TikTok and YouTube, Meta pointed to real-world consumer behavior and market trends, including evidence of consumers switching from Meta's services to YouTube or TikTok (or vice versa) when one or more of the services was unavailable (due to outages or when TikTok was banned in other countries). Meta also developed its own evidence of substitution between services by experimenting with offering financial incentives to certain participants to avoid using Facebook or Instagram and documenting user reactions.
Meta also argued, in part because PSN services are free to consumers, that they cannot constitute a relevant antitrust market over which it could exercise any degree of monopoly power. Meta argued that even if it did possess such power, its acquisition of Instagram and WhatsApp were not anti-competitive, especially considering the significant investments it has made since the acquisitions to improve and grow both applications.
Court's Opinion
Judge Boasberg conducted a thorough analysis of market definition, which proved decisive to the outcome of the case. The court rejected the FTC's proposed narrow market for PSN services – limited to Facebook, Instagram, Snapchat and MeWe – and applied the hypothetical monopolist test (HMT) to identify the boundaries of the relevant product market.
The HMT considers whether a hypothetical firm controlling all products in the proposed market could profitably impose a "small but significant and nontransitory increase in price" (SSNIP), typically around 5 percent. To adapt this test to digital markets, where services are free, the court focused on quality-adjusted price – whether a monopolist could profitably worsen the user experience (e.g., by increasing ad load or reducing privacy protections) without losing users to alternatives. The court emphasized that the relevant inquiry is not whether products are identical, but whether they are "reasonably interchangeable by consumers for the same purposes." In other words, the court sought to know whether consumers would switch to other platforms if Meta's apps became less attractive. Both qualitative and quantitative evidence informed this analysis, including user behavior, technological features and industry testimony. The court emphasized that market definition must reflect actual consumer behavior and competitive dynamics, not abstract differences in app features or historical categorizations.
The court's focus on the present state of the market, as opposed to historical power, governed its inquiry – and, ultimately, the outcome of the case. The court found that the FTC had not proved that Meta – whether it has at one time possessed monopoly power in a former iteration of social networking – continued to hold a monopoly today. As the market for social networking services evolved, distinctions between PSN apps and broader social media platforms eroded, with features and user experiences converging across Facebook, Instagram, TikTok and YouTube. Because the dominant features of these apps – recommendation algorithms, video sharing and direct messaging – are now largely identical, Judge Boasberg rejected the FTC's narrow market definition that excluded TikTok and YouTube, which he found are now direct and significant rivals, with substantial user engagement and market traction.
Industry testimony and internal documents further supported the court's findings. Meta's own internal analyses identified TikTok and YouTube as major competitive threats, and executives testified that the growth of TikTok had materially impacted user engagement on Meta's platforms. The court noted that most users of Facebook and Instagram were also active on TikTok and YouTube and that all four apps charged the same price (zero dollars), reinforcing their substitutability and the appropriateness of their inclusion in a single market.
The court found Meta's empirical evidence of substitution to be particularly compelling. Judge Boasberg described the results of Meta's experiment offering financial incentives to users to demonstrate switching as the "single best evidence of what consumers consider alternatives to Meta's apps." Judge Boasberg also focused on the evidence of consumer switching during outages and survey evidence showing that users engage with multiple platforms and that the motivations for using TikTok, such as staying connected with friends, overlapped significantly with those for Instagram and Facebook. He agreed that these data demonstrated that users found TikTok, YouTube and Snapchat interchangeable with Meta's services, contradicting the FTC's proposed definition of a relevant market that included only Meta, MeWe and Snapchat.
Key Takeaways
- A central theme in Judge Boasberg's opinion is the importance of current market conditions in antitrust analysis. The court acknowledged that Meta may have once held a dominant position in the market for PSN services but found that the landscape had changed so dramatically, particularly with the rise of TikTok and the enduring strength of YouTube, that any historical monopoly was no longer relevant to whether Meta continued to maintain a monopoly. The court emphasized that antitrust law is forward-looking: To obtain injunctive relief under Section 13(b) of the FTC Act, the agency must prove an ongoing or imminent violation, not merely a past infraction. Innovation can quickly disrupt any industry, particularly those that rely heavily on technology. With the breakneck speed at which the artificial intelligence (AI) industry is changing, agencies (and courts) might find challenges to transactions difficult at any stage, because market leaders may face different challenges (or be replaced entirely) in a matter of months. Market conditions can shift dramatically even in the time it takes the antitrust agencies to pursue a traditional merger challenge under Section 7 of the Clayton Act, which prohibits mergers likely to substantially lessen competition. Antitrust enforcement actions such as the FTC's case against Meta seeking to challenge retroactively under Section 2 of the Sherman Act transactions that the agencies did not block initially become increasingly implausible in an environment of technological change.
- FTC Commissioner Mark Meador posted on X that his "first reaction [to Judge Boasberg's decision] is that this just amplifies the importance of stopping anticompetitive mergers before they are consummated" because of the difficulty in unwinding transactions under the "stricter standard" of Section 2 of the Sherman Act, as opposed to Section 7 of the Clayton Act. Challenges under Section 2 of the Sherman Act to consummated transactions were already rare and might become increasingly rare going forward.
- Meta's use of surveys and field experiments to demonstrate actual user substitution between its apps and other platforms – essentially creating evidence on which it relied in its defense – played a significant role in the court's decision as to the relevant market. Companies facing future antitrust litigation should consider what evidence they can develop to support their arguments, particularly as to relevant market definitions.
- On the legislative front, the landmark Meta loss is likely to add support – at both federal and state levels – to the argument that antitrust laws have been outpaced in a global digital economy. Legislators may push for new laws based on the concern that existing antitrust laws cannot keep up with Big Tech. However, calls in recent years, at least at a federal level, for Congress to take action on antitrust have fallen flat, even when they appeared to have some bipartisan support. State legislatures have passed certain antitrust-related laws in recent years, particularly targeting competition in healthcare, but may take this latest loss for federal antitrust enforcers as reason to push for further changes to their antitrust laws.
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