Determining The Relevant Product Market and Market Shares in Digital Markets: FTC v Meta Decision Analysis
Introduction
The U.S. District Court for the District of Columbia (“Court”) issued its memorandum opinion (Memorandum Opinion)[1] on November 18, 2025, in the antitrust case (“Case”) between the Federal Trade Commission (“FTC”) and Meta Platforms Inc. (“Meta”). The FTC alleges that Meta monopolized the market through its acquisitions of Instagram and WhatsApp and violated the Sherman Act. Meta argues that competitors such as TikTok and YouTube exist in the relevant product markets and that its market share is too low to support the monopoly allegation. The Court's findings regarding the relevant product market and market share in the Case concerning digital platforms, along with the methodology used in these findings, offer important insights on the subject. The Court's methodology for determining the relevant product market and market share in digital platforms could serve as a precedent for competition authorities in both the US and other countries.
Legal Proceedings
Under US law, it is prohibited for an enterprise to obtain monopoly power in a manner contrary to competition or to use this monopoly power in an anticompetitive way. The FTC alleges that Meta has achieved a monopoly position because of anticompetitive practices. In evaluating these allegations, the court first examines whether Meta is in a monopoly position.
The court determines market share to look for evidence indicating that Meta is in a monopoly position. The decisive factor in the litigation process is the identification of the relevant product market and the calculation of Meta's market share in that market.
For monopoly power to be used in anticompetitive ways, the undertaking must first be monopolized. While there are many tools used to determine whether an undertaking is monopolized, determining market share is an important indicator. To determine market share, the relevant product market is first identified, and then the market shares of the undertakings operating in this market are measured.
Determination of the Relevant Product Market
To determine the relevant product market, the Court first examines Meta's activities that are the subject of the lawsuit. The transactions alleged by the FTC to have led to Meta's monopolization are identified as the acquisitions of WhatsApp and Instagram.
The FTC alleges that Meta, which operates the Facebook product, monopolized the market by adding Instagram and WhatsApp to its product portfolio through the acquisitions that are the subject of the lawsuit. Therefore, the Court identifies the services where the activities of the WhatsApp and Instagram applications overlap with those of Meta products.
The FTC argues that Meta's rationale for acquiring WhatsApp was to prevent WhatsApp from establishing its own social network in the future and becoming a competitor to Facebook. However, during the proceedings, neither party mentions WhatsApp in their arguments regarding the relevant product market. Therefore, the Court excludes WhatsApp from the discussions regarding the relevant product market and conducts an analysis specific to Instagram.
The FTC argues that Instagram and Facebook are in the same relevant product market, and this market should be defined as the “personal social networking” market. According to the FTC, in addition to these two products, the personal social networking market includes ‘Snapchat’ and “MeWe” products. Meta, on the other hand, argues that products in the social media market cannot be separated into a personal social networking market and that TikTok and YouTube should also be broadly included in the definition of social media.
The FTC's perspective on this matter aligns with the approach adopted in the U.S. Antitrust Subcommittee's “Competition in Digital Markets Report” (“Subcommittee Report”)[2] published in 2020. The Subcommittee Report proposes new approaches for analyzing competition in digital markets and emphasizes that traditional market definition methodologies do not adequately reflect the multifaceted business models of digital platforms. The Subcommittee Report assesses that applications such as Instagram and Facebook differ from TikTok and YouTube in terms of consumer behavior. While all applications essentially offer video sharing services, they differ in terms of their intended use. Facebook and Instagram are considered appropriate platforms for sharing “a child's first steps,” while it is argued that such a video would not be suitable for YouTube content. Therefore, the Subcommittee Report argues that TikTok and YouTube are not part of the personal social networking market, as defined separately among social media applications, as claimed by the FTC.
The court finds that, in evaluating the parties' claims regarding the relevant product market, the fundamental issue in dispute centers on whether TikTok and YouTube should be included in the relevant product market. For this reason, it examines whether a competitive relationship can be established between these products with Instagram and Facebook.
At this point, the Court first identifies the common and distinct features of the four products. It examines the similarities in purpose and form between the Meta Reel, Instagram Reel, TikTok video, and YouTube Short services. All the services are defined as services where short videos produced by content creators are displayed, users can react to the displayed videos (such as liking or commenting), and users can send the videos to their friends. In addition, all four applications use algorithms designed to recommend videos to their users.
The court finds that the services offered by the four applications are fundamentally similar, and the content creators even publish the same videos on all four platforms in the same way, concluding that the products are technically identical.
After analyzing the technical characteristics of the products and finding fundamental similarities, the Court then evaluates the substitutability between the products. To identify the substitutability between the products, consumer behavior in examples where TikTok and YouTube were unable to operate is analyzed.
In this context, first, the social media traffic of consumers during the period when TikTok was unavailable in the US and India is analyzed. In the US region, it is observed that during the period when users could not access TikTok, they switched to Facebook the most, followed by Instagram, and finally YouTube. Similarly, it was observed that during the period when TikTok was banned, users in India mostly shifted to increased use of Facebook and subsequently Instagram.
Based on its analysis of these two examples, the Court concludes that Instagram and Facebook are considered substitute products for TikTok users and therefore finds that TikTok is certainly in the same market as Instagram and Facebook.
In parallel with the analysis conducted specifically for TikTok, it is also shown that during the ninety (90) minutes in 2019 when YouTube was inaccessible, users mostly turned to Facebook and, with a very close margin, to Instagram. Considering the relationship between these results, a substitutability relationship is identified among YouTube, TikTok, Facebook, and Instagram.
Consequently, the Court defines the relevant product market to include TikTok and YouTube, contrary to what the FTC asserted.
Determination of Market Share
To analyze the claim that Meta has monopolized the relevant product market, the Court determines Meta's share of the market. While there are many methods for analyzing whether an undertaking has monopolized a market, it is accepted that undertakings that do not reach a certain market share cannot monopolize. Therefore, determining that Meta has not exceeded a certain market share threshold, or even approached it, is sufficient to reject the allegation of monopolization.
In determining market share in the classical sense, the ratio of the relevant undertaking's sales to total sales in the market is an important metric. However, sales are not an effective tool for determining the market share of platforms that do not make any sales to their users or whose sales to consumers constitute a minority of their overall users.
Therefore, the Court examines the business models of platforms and applies methods to determine their market shares in a manner appropriate to their activities. For platforms that derive most of their revenue from advertising on their applications, the most important factor in the economic performance criteria is advertising revenue. The most important factor affecting advertising revenue is advertisers' expectations regarding how many people will see their ads.
The Court identifies two key factors affecting ad visibility: (i) the number of active users and (ii) the time spent on the application.
At this point, the Court notes that, while it takes both factors into account in its assessment, total time spent on the application has a more direct impact on advertising expenditures and therefore constitutes a more appropriate metric for measuring market shares.
In this context, the Court finds that although Meta’s products (particularly Facebook) have reached a significant number of active users, they remain well below the threshold that could indicate monopolization when measured in terms of total time spent on the applications. Accordingly, the Court concludes that there is insufficient evidence to establish that Meta has monopolized the market.
Turkish Competition Authority Perspective
In its 2022 decision (“Decision”),[3] the Turkish Competition Authority assessed whether certain features introduced by Meta to its WhatsApp product constituted an abuse of dominant position and analyzed social media applications.
The Authority examined the relationship between Meta products and other social media applications. The Decision first distinguished between professional social media platforms such as LinkedIn and personal social media platforms.
In its assessment of products it defined as personal social media, it examined the relationship between personal social media applications, including TikTok and YouTube, and Meta products.
In its review of TikTok specifically, the Board noted similarities between TikTok and Meta products' short video services (Reels, Facebook Watch) and user-generated story services accessible for a limited time, concluding that there is demand-side substitution between the products. However, it emphasized that there is not a completely competitive relationship between the products in terms of all the services they offer and concluded that TikTok and Meta are only in limited competition regarding the services where a substitution relationship exists.
Conducting a similar assessment between YouTube and Meta’s products, the Board emphasized that YouTube is a platform where longer-form videos are shared and considered long-form videos to be a different service from short-form video content. Nevertheless, by noting that Instagram’s IGTV feature could be viewed as a demand-side substitute for YouTube’s video archive, the Board concluded that YouTube and Instagram are in a limited degree of competition.
Conclusion
In this case, had the Court accepted the FTC’s allegation that TikTok and YouTube operate in product markets separate from Meta’s products, Meta’s market share would have been assessed at a level high enough to support the monopolization claim. However, a broader definition of the relevant product market, one that includes TikTok and YouTube, was deemed sufficient to show that Meta had not monopolized the market.
Within the framework of competition law, where market share is decisive in analyses of abuse of dominant position and monopolization, the identification of the relevant product market is critical. This case provides important methodological contributions regarding how this identification should be made specifically for digital platforms.
The Court's broader market definition, which includes TikTok and YouTube instead of the narrow “personal social networking” market claimed by the FTC, kept Meta's market share below the monopoly threshold. This result clearly demonstrates that it directly affected the outcome of the competition law analysis.
- The Court’s decision dated 18 November 2025, numbered 1:20-cv-03590-JEB.
- Subcommittee on Antitrust, Investigation of Competition in Digital Markets Report (2020), p. 74.
- The Board’s decision dated 20 October 2022, numbered 22-48/706-299.
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