Meta a Monopoly? Shopped at an A&P Lately?

View of the windows of an A&P supermarket covered with posters advertising products, circa 1940. The Great Atlantic & Pacific Tea Company (or A&P) operated from 1859 to 2015. A.E. French/Frederic Lewis/Archive Photos/Getty Images

Commentary

The Federal Trade Commission is intent on pulling down Meta, originally Facebook, from the $1.3 trillion corporation’s heights in the social media firmament. In Federal Court on April 15, Meta CEO Mark Zuckerberg was scrutinized by an FTC attorney on his motives in acquiring Instagram in 2012 and WhatsApp in 2014—purchases given the green light by federal regulators at the time but now scorned by the government as a premeditated scheme to become a monopoly.

One of the great boy wonder entrepreneurs of the internet era, Zuckerberg has managed in recent years to aggravate both the left and the right.

The issue isn’t Zuckerberg’s principles, however, or the nature of his corporate ambitions, but rather the realities of the marketplace and consumer choice over the course of decades of non-stop technological transformation. Time and again—often with comical absurdity—the federal government has targeted “monopolies” that within a few years find themselves rendered dinosaurs by the innovators of the private sector’s next generation.

As Cato Institute economist Ryan Bourne has chronicled, President Jimmy Carter’s FTC conducted a two-year investigation of IBM’s supposed monopolistic dominance of the office typewriter industry on the eve of the availability of affordable desktop personal computers, which was to send the ubiquitous-for-decades IBM Selectric typewriter into the corporate dumpster by the million within a short span of years. The FTC had Kodak in its sights as long ago as the 1920s, with a federal jury finding the camera and film giant to be a monopoly as late as 1978, and yet Fujifilm in the late 1980s began eating away Kodak’s market share with its competitive pricing and quality. Then the digital camera dealt Kodak the final blow, with its ability to view photos instantly after taking them, edit them, store thousands of them on a computer, and send copies to someone on the other side of the world in the wink of an eye.

In 2006, MySpace, purchased the year before by Rupert Murdoch for $580 million, enjoyed more online visitors than Google, yet by the end of the decade Facebook had overtaken it—purely due to savvy innovations that correctly discerned user preferences—and MySpace’s “monopoly” had shriveled to 30 percent market share.

The most glaring demise of a presumed monopoly, however, has to be that of a cultural cornerstone of the 20th century, one of the most famous, beloved, taken-for-granted business institutions in the country: the Great Atlantic & Pacific Tea Company, otherwise known as A&P supermarkets.

Founded the year before Abraham Lincoln was first elected president, A&P was until 1965 the largest retailer of any kind in America, and, from 1915 on, the biggest grocery seller. The same charges leveled at online global retail powerhouse Amazon—devastating industry disruption, predatory artificial price cutting, engineering the extinction of traditional local retailers—were hurled at A&P, and in 1946 a federal court found the supermarket chain to have violated the 1890 Sherman Anti-Trust Act, not for raising prices but because it possessed the power to do so. It responded with ads in thousands of newspapers asking, “Do the American people want A&P out of business? … Nobody has ever said we charge too high prices — just the opposite.” Ultimately, A&P satisfied the government with the curious concession of selling off parts of its business that sold items to its competitors.

Logistical changes, technological advances, and innovations in location and delivery implemented by its rival supermarket chains were to overwhelm A&P, and in Bourne’s description the company “was disrupted in the same way it had disrupted the grocery retailers of the early 20th century,” and A&P filed for Chapter 11 bankruptcy in 2010, then again in 2015. Today, a brand presence once as familiar as McDonald’s is out of existence entirely.

Perhaps the most important lesson in the surprise toppling of so many invincible corporate giants is that government cannot predict what the marketplace will be able to offer in the future. When the government blithely declares in court that Zuckerberg knew that Instagram would grow in the years ahead to threaten Facebook’s dominance, it ignores the fact that at the time Zuckerberg bought Instagram it was but an embryonic version of what it is today, a photo and video sharing app limited by a square aspect ratio of 640 pixels, geared to iPhone’s display width at the time, and with no messaging ability. It was only after Zuckerberg bought and expanded it that Instagram became a global social media platform that now boasts billions of users. There are no grounds to assume this would have happened anyway, or even a fraction of it. The bats used by Hank Aaron would not have hit 755 home runs had they been swung by some other player.

What’s more, the Sherman Act does not describe monopolizing actions clearly. As Supreme Court Justice Byron White noted in his unanimous 1992 Spectrum Sports, Inc. v. McQuillan decision, the 19th century law “does not define the elements of the offense of attempted monopolization. Nor is there much guidance to be had in the scant legislative history … The legislative history does indicate that much of the interpretation of the necessarily broad principles of the Act was to be left for the courts in particular cases.”

In the Supreme Court’s first real grappling with the inadequately formulated law, the 1905 Swift decision, Justice Oliver Wendell Holmes, writing for a unanimous court, unhelpfully observed that “Not every act that may be done with intent to produce an unlawful result is unlawful, or constitutes an attempt. It is a question of proximity and degree. The distinction between mere preparation and attempt is well known in the criminal law.”

So identifying a monopoly relies not on precisely formulated statute but on the courts’ judgment of the “proximity and degree” of the intent in the minds of CEOs.

All too often when a business’s success is so prodigious that its rivals are few or non-existent, it finds itself vilified and discounted as having perpetrated a monopolization. But a true monopoly is one store within your range of travel selling the bread you and your family need to live at the outrageous price of, say, $20 a loaf. Even in such a case as that, however, the seller will be collecting plenty of ill will to go along with his fleeting profits; every successful entrepreneur knows that unhappy customers are not part of the recipe for success.

It is absurd to imagine that Meta is a monopoly when it is constantly in heated competition for users’ time with the likes of TikTok, YouTube, and iMessage. One of the FTC’s complaints actually pertains to the proclivity of advertisements Instagram users are subjected to, as if it could be determined what the quantity or nature of advertising would be on the platform today had Zuckerberg not purchased it 13 years ago.

Chances are that Meta will be overtaken within the lifetime of most of those now reading these words by a company that probably doesn’t even exist yet, and which offers a user experience we cannot yet imagine because the technology has not been conceived, let alone executed. A monopoly that can be so easily relegated to the corporate ash heap, alongside A&P and Kodak, is no monopoly at all.

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.