The Federal Trade Commission (FTC) has lost its long-running suit contending that Meta Platforms monopolized a “personal social networking” (PSN) market by acquiring Instagram and WhatsApp, two acquisitions that the FTC had previously reviewed and declined to challenge. Judge James Boasberg of the Federal District Court for the District of Columbia held first, as a matter of law, that the relevant question was whether Meta has market power now, rather than when the suit was filed five years ago. Second, the court found that the FTC had failed to prove its relevant market (which the FTC alleged was essentially limited to Facebook, Instagram, and Snapchat) and that, when competitors such as TikTok and YouTube were included, Meta lacked monopoly power.

The ruling marks the first loss on the merits for the government in its push to bring monopolization cases against big tech platforms, and it provides a crucial touchstone for evaluating antitrust claims in rapidly developing and realigning technology industries. The litigation is a case study in how rapidly competitive dynamics can change and the ability of strong adjacent players to disrupt seemingly secure positions and spur innovation arms races. These are key questions as enforcers and policymakers confront the impact of AI on existing industries and the development of AI technologies themselves.

Background

The FTC filed its suit against Meta in December 2020, at the tail end of the first Trump Administration, as part of a growing government focus on the largest technology platform companies. The agency alleged a nascent competition theory, arguing that Meta had maintained monopoly power in PSNs by acquiring upstart rival Instagram in 2012 and then acquiring the adjacent messaging service WhatsApp in 2014 to prevent it from transitioning into the PSN space. The court initially dismissed the complaint in 2021 for failing to plausibly allege monopoly power. The court held that the FTC’s bare assertion of a greater than 60 percent share was insufficient, particularly in a market with unclear boundaries and unusual characteristics like the alleged PSN market.

The FTC filed an amended complaint under the Biden Administration’s FTC Chair, Lina Khan. The new filing stayed the course in many respects, focusing on bolstering the monopoly power allegations, and it survived a renewed motion to dismiss in 2022. The court cautioned at the time, however, that “the agency may well face a tall task down the road in proving its allegations” (emphasis in original). In 2024, the court largely denied both sides’ summary judgment motions, but emphasized again that the FTC faced “hard questions about whether its claims could hold up in the crucible of trial.”

Following a six-week bench trial in spring 2025, the court found for Meta on November 18, 2025. The court held that the FTC had failed to prove a PSN market that excluded competition from services like TikTok and YouTube and that, when these players were included, Meta lacked monopoly power.

A Threshold Issue of Timing

Judge Boasberg opened his opinion with a reference to Heraclitus’s aphorism that “no man steps into the same river twice” and noted in his concluding remarks that “Each time [the Court] examined Meta’s apps, they had changed. The competitors had, too.” Consequently, the question of when the FTC’s allegations of a well-defined relevant market and monopoly power in that market should be placed in time became a critical threshold issue. Relying on the text of Section 13(b) of the FTC Act, the court held that the FTC had to prove that Meta currently had a PSN monopoly, at the time the court’s decision issued. The court reasoned that the Act permits the FTC to seek injunctive relief only for conduct that “is violating” or “is about to violate” a law, not violations that have ceased. This requirement proved decisive for the dynamic social networking and social media spaces where Meta has competed.

The FTC Failed to Prove a Monopoly Existed Today

The court undertook a thorough analysis of whether Meta maintained a monopoly position today, reviewing both direct and indirect evidence submitted by the FTC. In both cases, the evolution of Meta’s service over time and its responses to perceived competitive threats proved crucial. Facebook began as a way for people to post and share content with a group of identified friends (called connected content). Over time, across social services generally, users began to post less content themselves and to view more content coming from users with whom they were not connected (called unconnected content). Meta’s response, as well as the responses of others, to these trends that were playing out over the course of the litigation guided the court’s analysis.

Direct Evidence. Because Meta’s services are offered for free to users, the FTC alleged that Meta’s monopoly was evident from sustained profits above the cost of capital and a change in “quality-adjusted price,” as reflected in ad load, user sentiment surveys, and the pace of feature improvements. The court dismissed the first as the FTC had not shown Meta’s profits were unusual in its industry or that they were not the result of its extensive R&D investments or superior management. Without excluding these possibilities, the court refused to infer monopoly power. The court further found that Meta’s profits had risen as users came to focus less on connected content (where Meta’s monopoly allegedly lay) and more on unconnected content, suggesting that Meta’s profits were not driven by its alleged monopoly.

The court also rejected allegations concerning quality-adjusted pricing. The court discounted user-sentiment surveys as they reflected broader brand sentiment and effects based on service quality could not be isolated. The court further observed that Meta had plainly invested heavily to improve its service over the relevant time period and that the FTC could not prove a comparison against a hypothetical service (i.e., that Meta would have improved its products even more but for the alleged anticompetitive conduct).

Finally, with respect to ad load, the court stated that the number of ads shown to users was just one aspect of overall product quality and that it could not conclude that overall quality degraded when ad load increased while feature improvements were made. The court further found that Meta had invested to make its ads more appealing, and that Meta’s policy was to increase ad load only if the quality improved. The court therefore suggested that an increase in ad load was not necessarily a decrease in quality-adjusted price, but part of Meta’s plan to maintain prices at a competitive level.

Indirect Evidence. The court’s analysis of indirect evidence of market power centered on the scope of competition faced by Meta—again, at the time of the court’s decision and not when the acquisitions were made or even when the suit was filed. The FTC’s alleged PSN market was limited to Facebook, Instagram, Snapchat, and a much smaller service called MeWe. Meta responded that any relevant market in which it operated had to include TikTok and YouTube. Examining the history of convergence between social services focused on connected content and those focused on unconnected content and experiments showing user substitution, the court agreed with Meta.

The court found that Meta had recognized TikTok as a competitive threat when it entered the United States in 2018 and had worked to develop features (called “Reels”) to mimic TikTok and placed them prominently throughout its apps. At the same time, TikTok began to invest in developing social graph features similar to Facebook’s. The evidence showed a similar competitive response to YouTube’s introduction of YouTube “Shorts.” Internal documents showed that Meta, TikTok, and YouTube each continued to develop their products in response to innovation and feature development from the others.

Quantitative evidence from planned and natural experiments played a substantial role in the court’s decision, underscoring the importance of real-world data to define market boundaries. In a controlled experiment, Meta paid users a small amount of money not to use Facebook and found that large fractions of the “lost” Facebook users and time were diverted to TikTok and YouTube. This economist-designed experiment was particularly important because it provided the clearest evidence of marginal switching behavior, which is the basis for the hypothetical monopolist test employed by the court to identify a product market. The court also credited several natural experiments where Meta evaluated the impact of outages among social media services (including legal bans involving TikTok). These experiments showed that Facebook, TikTok, and YouTube ranked highly among substitutes for each other.

The court also undertook the Brown Shoe qualitative factors analysis, though it cautioned against overreading them when quantitative evidence showing substitution patterns is also available. The court found that these factors favored Meta on the whole, noting that services like Meta, TikTok, and YouTube have converged toward each other and rely on largely similar technologies. Industry participants recognize these overlaps and competition among a broader range of social media services than the PSN market alleged by the FTC.

The court concluded its inquiry by finding that Meta’s market share, measured either as usage time or daily- or monthly-active users, was below any established threshold for inferring monopoly power and was in fact falling.

Impact of the Decision

The decision in this case is a landmark in the ongoing debate about whether and how the antitrust laws should be deployed against large technology companies whose services permeate American economic and social life. While the decision may still be appealed, Judge Boasberg’s opinion sheds light on some of the important questions in that debate:

• What the requirements are for prospective relief in retrospective merger challenges. The court’s focus on market definition at the time of decision, rather than suit, gives ammunition to future defendants in suits seeking prospective relief where markets are changing, converging, or being disrupted—something widely expected to occur across the economy due to ongoing AI innovation. While the DOJ can seek retrospective equitable monetary relief and private parties can seek damages, Judge Boasberg’s reasoning and the facts of this case may cause future courts to give pause to ordering injunctive relief where current monopoly power cannot be established.
• Which evidence carries the most weight in performing market definition. In evaluating the scope of competition, Judge Boasberg placed great weight on data from natural experiments showing user substitution. Although he also undertook the Brown Shoe analysis, he cautioned against over-relying on qualitative evidence, citing Brown Shoe itself for the proposition that courts must “recognize competition where, in fact, competition exists.” The fact-intensive inquiry carried out by Judge Boasberg (and his repeated warnings about how the FTC’s theories may fare at trial) highlight ongoing tension between agency reliance on more abstract or theoretical bases and courts’ inclination toward real-world evidence.
• How to define digital services markets when products change constantly. The court rebuffed an FTC theory that Meta’s products competed in both a narrow PSN market and a broader social media market. The FTC sought to limit consideration to Facebook’s connected content features, and to frame Meta’s Reels as a foray into a new market. But Judge Boasberg found that the evidence established competition between connected and unconnected content, in particular noting that Facebook was bleeding users to TikTok before launching Reels. The court’s emphasis on real substitution evidence over formalistic division of product features may inform the analysis of innovation that extends rather than replaces existing services in future cases—something that, again, may occur commonly as AI technologies mature.
• How to define markets when different groups of customers value different aspects of the product. The court also rejected an FTC theory that there was a core set of users peculiarly focused on Facebook’s connected content features and who could therefore be exploited by higher ad loads, analogous to the Whole Foods D.C. Circuit decision. Judge Boasberg, plainly anticipating appeal of this point, set down a broadside against the precedential value of the case before addressing it on its terms and finding that evidence contradicted the claim that such users had higher ad loads or that differences in ad load constituted a significant difference in quality-adjusted price.
• How do post-closing Section 2 challenges differ from Section 7 challenges. Because the FTC brought this case as a monopolization case under Section 2, it had to show actual market power (and as discussed above, that showing had to be made at the time of the decision). Had the agency challenged the mergers when they occurred under Section 7, it would have had to clear only the lower bar they “may substantially lessen competition” going forward. The inquiry under Section 7 focuses less on current market conditions and looks prospectively to try to predict how competition may develop in the future, providing enforcers with greater flexibility in defining theories of harm.

The decision may also spark renewed efforts to substantively reform the federal antitrust laws. U.S. Senator Amy Klobuchar issued a statement that the decision “makes clear that our laws are not keeping pace with advances in technology” (with some irony given Judge Boasberg’s close focus on the latest technological developments among social media players). Senator Klobuchar cited the decision to renew a push to pass her Competition and Antitrust Law Enforcement Reform Act. The bill sets a stricter standard for permissible mergers and shifts the burden of proof on certain mergers onto the parties to show the merger is legal.

For more information, please contact Maureen Ohlhausen, Jamillia Ferris, Franklin Rubinstein, Taylor Owings, or any member of the firm’s Antitrust and Competition practice.