The FTC has brought back its expert economic witness Scott Hemphill to rebut arguments from Meta’s experts about the company’s alleged monopoly power. Hemphill begins his rebuttal testimony by arguing that Meta’s experts used flawed analyses that do not get at the relevant questions to determine whether the company has monopolized a market for personal social networks.
The Justice Department is investigating whether Google crafted its agreement to skirt regulatory scrutiny, Bloomberg reports. The deal brought Character.AI’s co-founders back to Google and didn’t technically involve an exchange of shares, though investors were set to receive a payout, The Verge previously reported. Google spokesperson Peter Schottenfels told Bloomberg that Google is “always happy to answer any questions from regulators,” and added that Character.AI remains separate, with no ownership stake by Google.
After about four days of witness testimony in its case-in-chief, and on the sixth week of trial, Meta concludes its defense. The FTC plans to put on its rebuttal case on Tuesday, where it plans to call back its economic expert Scott Hemphill to respond to Meta’s experts.
Even though Carlton says Instagram has been such a “grand slam home run” that it’s hard to imagine it doing even better without Meta, the FTC points to past markets where output increased even while plagued by a monopolist. It pulls up a slide used by the Justice Department in its antitrust case against Google, showing that global PC shipments increased while Microsoft dominated, with similar trends for long distance calls during AT&T’s monopoly, and global crude oil production at the height of Standard Oil’s power. Carlton says that anything is possible and “the moon could fall out of the sky tomorrow, but if you’re asking me if its likely that output would be higher in the but-for world, the answer would be no.”
If market players knew what Instagram would come to be worth in the years after Meta’s acquisition, the deal could have fetched a price at least 40 times more than the $1 billion it got at the time, Carlton testifies. “I just see no basis for making this assumption that Instagram in the but-for world would have been even better,” he says.
Carlton performed a regression analysis to show that the FTC’s theory that Meta charges users interested in friend content a higher price through ads does not bear out. There’s “no systematic positive relationship between ad load and number of friends,” he concludes. In fact, he found, younger users who spend a larger percentage of time on Facebook ad Instagram on friends and family sharing receive fewer ads than older users who spend a smaller portion of their time on such content.
In the past two years, Carlton says the amount of time US users spend on “friend” content on Instagram has declined from 11 percent to 7 percent. As of January, US Instagram users spent 51 percent of their time on the app on Reels. When Instagram has experimented with reducing users’ access to Reels, he says, time spent on the app goes down. Those who had full access to the short-form videos overall spent less time on Feed and Stories, which the FTC has said is associated with friend content that doesn’t compete with TikTok and YouTube.
