Meta Platforms launched its Threads app earlier this month. In less than five days, it had 100 million new users, surpassing ChatGPT’s recent record as the fastest-growing online platform in history.
The company that owns the Facebook, Instagram and WhatsApp platforms has long faced competition law scrutiny over its acquisition and exercise of market power. It has a history of aggressively acquiring promising new competitors and folding them into the Facebook family before they can pose a realistic threat to the company’s market dominance. Indeed, the Meta chief, Mark Zuckerberg, even tried to buy Twitter, twice, more than a decade ago.
The US Federal Trade Commission (FTC) has an ongoing case against Meta, alleging that it acquired Instagram and WhatsApp as part of an illegal strategy to reinforce its market power. In the past it sought unsuccessfully to prevent its takeover of Within. The UK’s Competition & Markets Authority (CMA) has prohibited its acquisition of Giphy and the German competition authority imposed significant restrictions on its integration of Oculus into the Meta ecosystem.
Meta also has a reputation for business practices of dubious morality, from the Cambridge Analytica scandal to concerns that it fails to protect underage users or tackle hate speech. Put simply, Meta seems hell-bent on preserving its own market power, and not particularly inclined to use this for the common good.
From the perspective of healthy market competition, though, the development of Threads arguably is a good news story. Developing new or improved products that better meet consumer demand is to be encouraged. Twitter, in its Musk-era incarnation, appears to be in chaos: abandoning disinformation and verification policies, throttling users’ access to its own services and bleeding advertisers.
Since Threads was developed in-house at Meta and not acquired, the merger control rules don’t apply in this case. As we saw with the failure of Mastodon, new entry into the social media market is not impossible but it is very difficult, as it depends upon a critical mass of users making the switch together around the same time. Threads, which requires an Instagram account for access, obviously benefits from Instagram’s existing base of more than 2 billion users.
If the competition rules can’t (and, more importantly, would not want to) stop Meta from launching Threads, what other regulatory options does this area of law give us? For years, there was some squeamishness, particularly in the US, about using competition law to regulate the day-to-day activities of big tech.
However, such reluctance was largely swept away by a trio of “abuse of dominance” decisions taken against Google by the European Commission. The decisions resulted in almost €8bn (£6.8bn) in fines for the company and significant changes to key products, including its general search service and its Android operating system. President Biden subsequently appointed vocal critics of big tech to leadership roles within the US antitrust authorities.
Meta has felt the effect of this sea change. It is facing abuse of dominance investigations by the European Commission and the CMA into its data usage policies for Facebook Marketplace. Both involve “self-preferencing”, which alleges that the dominant platform is illegally favouring its own services at the expense of rivals. The EU case also involves claims of “tying” between Marketplace and the ordinary Facebook network. Given that access to Threads requires users to hold an Instagram account, it is possible that self-preferencing or tying concerns could be raised in this context in future.
Perhaps the most potent tool available to regulate Threads, however, is the EU’s Digital Markets Act (DMA). The DMA is intended to complement the existing competition rules by putting a focus on very large digital platforms that are deemed to have gatekeeper status. The most problematic obligation under the DMA, from Meta’s perspective, is a blanket ban on combining personal data acquired across various services operated by a gatekeeper, unless the user has been presented with a “specific choice” and expressly consents. Indeed, Meta appears to be sufficiently concerned that its current data practices may not be compliant with the DMA rules that it has postponed the launch of Threads within the EU for the foreseeable future.
This outcome shows both the advantages and risks of more aggressive market regulation of big tech. On the one hand, it is clear evidence that regulation is affecting how Meta develops its business activities. On the other, it has the paradoxical result of depriving EU-based consumers of a useful new product, at least in the short term. It seems improbable that Meta’s stroppiness will cause it to keep Threads out of the world’s largest single market permanently. But this event could be indicative of a more generally hostile reaction by gatekeepers to the impositions of the DMA, which has been described as “a lawyer’s paradise” that is likely to generate large quantities of litigation before the EU’s courts.
In the UK, the digital markets, competition and consumers bill is before the House of Commons. It introduces a broadly equivalent regime for digital firms holding “strategic market status”, but will be more closely tailored to the specific business model and market problems posed by each regulated firm. Meta is certain to face scrutiny under the UK regime in due course.
The launch of Threads illustrates the complexity of competition in digital markets. If Threads follows through on its early success, this will further entrench Meta’s already substantial power in social networking markets. Yet the app’s emergence as a viable and attractive competitor to the increasingly dysfunctional Twitter was largely facilitated by its existing market position. It’s an issue not even the most skilled social media user could sum up or resolve in 500 characters or less.
Niamh Dunne is an associate professor teaching in the areas of competition and EU law
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