Randy Picker on the Potential Negative Effects of Reviewing Facebook's Mergers

Reviewing Facebook’s Mergers Could Have Negative Ripple Effects

December 2020 was an extraordinary period in US antitrust law. On December 9, 2020, two cases—one by the Federal Trade Commission and one by state attorneys general from almost every state—were brought against Facebook. One week later, a group of states, led by Texas, brought a new case against Google. And the following day, states, led by Colorado, brought an additional suit against Google. That means Google is now facing three government cases, as the federal government and another group of states had filed an antitrust case against Google on October 20, 2020.

The two cases filed against Facebook focus on the company’s purchases of Instagram and WhatsApp, though both complaints have a tag-along issue as to whether Facebook has manipulated access to the Facebook platform in an anti-competitive manner. And the Texas complaint against Google is noteworthy in that it alleges a conspiracy in violation of Section 1 of the Sherman Act between Facebook and Google regarding advertising markets and yet doesn’t name Facebook as a party to that action. (If you want more on that allegation, The New York Times has dug into the background and a private party has now brought a case based on these allegations.)

I want to focus on the Instagram and WhatsApp mergers. Considering those mergers raises important questions about how we should organize merger inquiries, why we should favor or disfavor mergers and when and what remedies might be sensible. A key focus for my analysis is the timing of when merger review should take place and how that timing matters for investment decisions. (This is a natural issue to think about the Facebook complaints, as my former student Dirk Auer emphasizes in his piece on these issues.)

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