When a US federal judge ruled in late November that Meta does not maintain an illegal monopoly in social media, it was a reminder that even the strongest evidence can look weak when enforcers act too late. Rejecting the US Federal Trade Commission’s narrow market definition, the court instead concluded that Meta, formerly known as Facebook, competes against a broad array of rivals such as TikTok and YouTube. While legal scholars can and will dissect the opinion, the biggest takeaway is that timing matters in dynamic markets, implying that antitrust authorities must develop a preventive approach, rather than relying solely on reactive measures. The case centred on Facebook’s acquisitions of Instagram in 2012 and WhatsApp in 2014, when both were unmistakably competitive threats. Facebook said so itselfBut the case collapsed under the weight of today’s market reality. Instead of considering the world as it existed when the mergers occurred, the court (incorrectly) cited the rise of TikTok, Snapchat, and YouTube Shorts as evidence that Facebook lacked monopoly power. The flaws in the court’s reasoning reflect a deeper problem with litigating consummated mergers: it asks judges to travel back in time and forget what they now know. Questions like “Would Instagram have become this significant without Facebook’s investment?” or “What competition might have emerged if the acquisitions had not taken place?” are inherently counterfactual. It is very difficult to measure the impact of competition that never existed. This suggests that the acquisitions should have been challenged when they were first proposed – a difficult task, but not as hard as challenging consummated deals. Predicting the future is less formidable than reconstructing the present on the basis of an imaginary past. The flaws of late enforcement were also on display in the Google antitrust trial. Even as a US federal judge ruled in 2024 that Google had illegally monopolised general-search services, the remedy was softened by the perception that AI chatbots were already reshaping the market. Even the boldest proposed remedies centred less on restoring competition in search and more on ensuring that the next tech frontier remains open. Regulators should have prevented Facebook from acquiring Instagram and WhatsApp in the first place, but erred on the side of caution, fearing false positives and believing that the market would self-correct. But that decision has proved impossible to unwind, even though Facebook’s acquisition of direct competitors in a competitive market should have been a straightforward win for antitrust authorities – the very kind of textbook harm the law is designed to prevent. To their credit, the FTC and the department of justice under former US president Joe Biden had begun to develop and use their preventive toolkit. They challenged several mergers (including Nvidia-Arm, Illumina-GRAIL, and Microsoft-Activision Blizzard), examined practices in nascent industries such as AI partnerships, and launched early probes into emerging monopolies in the cloud computing and semiconductor markets. But the pendulum has swung back under Donald Trump’s second administration, which has pursued merger settlements, dialled back investigations into AI giants, and revived the myth that tech firms are the guardians of innovation and national security. It doesn’t have to be this way. US antitrust regulators now have stronger merger guidelines and a clearer understanding of how digital markets work. What they need is the political will to act early and decisively. The same applies to other governments. The most consequential tech mergers are reviewed simultaneously in multiple jurisdictions, and regulators in the European Union and the UK also have powerful preventive tools, including merger review and market studies. Even just initiating an investigation can create enough friction and uncertainty for parties to abandon a deal, as happened with Nvidia-Arm and Visa-Plaid. But the global scramble to attract AI investment has pushed competition enforcement into retreat. Amid increasing geopolitical turbulence, regulators are forgetting the hard-earned lessons of the platform era and pulling back precisely when they should be applying those lessons to block anti-competitive AI mergers and prevent the emergence of AI monopolies. The result is a classic collective-action problem, even though all it takes is one courageous competition authority to block a global deal and change the trajectory of an entire market. The Meta decision can seem like much ado about nothing: one case that was too difficult to win despite overwhelming evidence. But viewed in a broader context, it becomes clear that timing makes all the difference in antitrust enforcement. Regulators must learn to flex their preventive muscle to have any hope of taming Big Tech. - Project Syndicate
