Joseph Price writes that how the court in the Meta antitrust case determines the relevant product market may have implications for merger activity among television broadcasters, who have similarly argued that the regulators and courts use outdated market definitions to block consolidation.
The Federal Trade Commission’s (FTC) antitrust lawsuit against Meta (nee Facebook) could inform the debate on whether recent product market definitions of broadcast television stations are outdated. Currently, broadcast television product markets are largely based on whether advertisements are rendered through a unique technology that reaches a unique audience. Many broadcasters believe this product market definition is too narrow given the emergent activity of digital companies like Amazon and Meta. The Meta case, which hinges on the market definition for personal social media, could support the broadcasters’ arguments in the future. If the court agrees with Meta that it competes against media platforms generally, it may pave the way for broadcasters to consolidate market share in a way that is currently impermissible. Broadcasters will have support to argue that station ownership should be allowed to consolidate, given the increasing participation of competing digital media companies.
Most important to the outcome of the Meta case is the court’s determination of who competes with whom. The degree of Meta’s “dominance” varies depending upon what competitors are included in the defined product market. The government is arguing that Meta maintains “a dominant share of the U.S. personal social networking market (in excess of 60%),” competing only with apps such as Snapchat and MeWe. Meta’s chances of a successful defense increase if it convinces the court that it has little market power with “<30% market share” in a broader product market that also includes a wide variety of media platforms.
Meta does not identify television broadcasters as direct competitors, but broadcasters identify Meta services as competitors, and both Meta and television broadcasters identify the same and similar media platforms as competitors. For example, Gray Media, an operator of some 180 television stations, argued that it faced “increasing competition from digital companies, including Google and Facebook, and broadcast ratings in decline due to viewer fragmentation from streaming services such as Netflix and Amazon Prime Video,” in an application at the Federal Communications Commission (FCC) to transfer broadcast licenses from Quincy Media, Inc. to Gray that would leave the latter with two top-four network affiliations in several markets (see “Comprehensive Exhibit-Redacted.pdf” under “Attachments”). And Gray describes “increasing competition from cable channels, streaming services, digital platforms, social media, and internet-delivered video channels,” in its most recent Annual Report (Form 10-K).
In a filing with the FCC, the National Association of Broadcasters (NAB) likewise describes a broad product market definition that includes digital media platforms that utilize the internet, “include[ing] global streaming, Big Tech, and social media platforms such as Netflix, Amazon Prime, Apple TV+, YouTube, and TikTok.” Also, change is reportedly occurring with live sports programming that television broadcasters once relied upon “to bring big audiences,” but who now face bidding competition from Netflix, Amazon, and Apple for the rights to air NFL, NBA and MLB games.
Current broadcast product market definition
The Department of Justice (DOJ) consistently describes narrower relevant market definitions when challenging broadcasting station combinations. In 2001, for example, when the DOJ sued to prevent News Corp’s acquisition of a broadcast group, it described a narrow product market in which “[b]roadcast television spot advertising possesses unique attributes that set it apart from advertising using other types of media [and] [o]nly television combines sight, sound, and motion, thereby creating a more memorable advertisement.” The DOJ reasoned that “of all media, broadcast television spot advertising reaches the largest percentage of all potential customers in a particular target market” and “is an advertising medium for which there is no close substitute.”
Twenty years later, not a lot had changed. In 2021, the DOJ sued to enjoin a similar transaction, explaining in its complaint initiating the case that “[b]roadcast television spot advertising possesses a unique combination of attributes that advertisers value in a way that sets it apart from advertising on other media [and] … combines sight, sound, and motion in a way that makes television advertisements particularly memorable and impactful.”
Product market definition in the Meta case
The court similarly found a product market narrower than what Meta describes in its pre-trial order denying Meta’s request for summary judgment. It agreed with the FTC that a “relevant antitrust market exists for personal social-networking services,” in which there is limited competition to Meta’s Facebook, Instagram, and WhatsApp. The court turned to the factors of Brown Shoe, finding that personal social-networking services, unlike others, have “peculiar characteristics” and “unique” uses with a “focus on friends-and-family sharing.” Services providing the same video, on the same device, but through different media platforms, may not be in the same product market. For example, the court discussed the government’s argument that “a sports clip watched on Facebook is ‘integrated’ within a social graph focused on friends-and-family sharing … [which] is a fundamentally different experience from watching that same clip on YouTube or TikTok.”
Meta counterargued in a pretrial brief that the court should engage in a different analysis at trial and acknowledge a wider range of competing media platforms. Instead of relying on “descriptive product differences alone,” Meta explains “the FTC needs economic indicia—pricing or substitution evidence—or at least industry recognition that every feature available on Facebook and Instagram (other than Facebook Dating) is constrained only by Snapchat and MeWe.” There is the complicating factor that Meta, like broadcasters, relies on advertising revenues instead of charging users. As the court explained, that limits the number of directly substitutable services in the product market and makes for “an awkward fit with many of this nation’s antitrust precedents” that judges “price and output effects.” But an analysis is possible “even with zero-price products.” For example, the court discussed how “[a]n increase in the quality-adjusted price of Meta’s products […] might be shown through an increased ‘ad load’—or ‘the percentage of advertisements served to users as a fraction of total items shown’—a decrease in privacy, or other indications of declining quality.”
The court also could turn to a submarket analysis, as in Whole Foods, where the D.C. Circuit Court concluded that Whole Foods competed in the narrow product market for “premium, natural, and organic supermarkets,” as well as a broader market of conventional supermarkets. Evidence could indicate that Meta competes against a number of media platforms and competes within a separate submarket of media services focused on friends-and-family sharing, despite cross usage. As the court explained, “[t]hat means, as relevant here, that competition between Meta and other social-media firms for users’ time and attention does not necessarily make them part of the same relevant product market.” Meta downplays the possibility that a personal social-networking services submarket exists separate from a larger media market, arguing it is a “fallback” position requiring significant proof from the government that there is demand for a friends-and-family sharing service from a distinct group or subgroup of consumers and that Meta is able to impose “differentiated pricing” on that group.
The Meta trial is now underway. Arguments have been outlined with pretrial briefing (FTC; Meta) and opening statements (FTC slides; Meta slides), and there is much to come as Meta now presents its defense. Meta and broadcasters might be in the same or different product markets, or compete in submarkets, depending upon the proof presented and the court’s perspective. The debate will continue and reasons remain to stay tuned in, regardless of a single case, so long as technology evolves for media platforms. Meanwhile, the evidence provided and the court’s analysis can inform how to define television broadcasting product markets.
Author Disclaimer: Joseph Price is an Attorney Advisor in the Media Bureau of the Federal Communications Commission. The article represents his personal views and not those of the United States government.
Author Disclosure: The author reports no conflicts of interest. You can read our disclosure policy here.
Articles represent the opinions of their writers, not necessarily those of the University of Chicago, the Booth School of Business, or its faculty.
