May 22, 2025, 03:17 GMT | Insight

Instagram would not have been as successful as it is today had it not been acquired by Meta Platform in 2012, an economic expert for the tech giant testified today while arguing that the US Federal Trade Commission, or FTC, has provided no evidence to the contrary.

Instagram would not have been as successful as it is today had it not been acquired by Meta Platform in 2012, an economic expert for the tech giant testified today while arguing that the US Federal Trade Commission, or FTC, has provided no evidence to the contrary.

Dennis Carlton, senior managing director at economic consultancy Compass Lexecon, appeared as the final witness in a monopolization trial brought by the FTC that began six weeks ago in a Washington, DC federal court.

Carlton, a professor of economics at the University of Chicago’s Booth School of Business, testified for Meta and sought to disprove arguments posed by the FTC’s economic expert, Scott Hemphill, who testified last week (see here).

“Instagram is a grand slam home run,” Carlton said during direct examination by Meta counsel Aaron Panner.

“Nobody thought in 2013 that Instagram would be as successful as it is today. That means whatever Meta has done with Instagram has exceeded people’s expectations. But that’s not what the market thought in 2013,” he said.

Carlton argued there is “no basis to believe that Instagram in the but-for world would be better” because, as a standalone company, it wouldn’t have been able to monetize user time and attention on the photo-sharing app in the same manner that it has under Meta.

“There is no evidence to suggest that Instagram could have grown more [had it been a standalone company not bought by Meta],” the expert witness said. “I don’t see any evidence that it could have grown more… Professor Hemphill makes no presentations that Instagram would have done even better in the but-for world.”

According to Carlton, Meta’s acquisitions in 2012 and 2014 of photo-sharing app Instagram and messaging app WhatsApp, respectively, were not anticompetitive.

Following the acquisitions — which the FTC is asking a federal court to unravel because they were allegedly exclusionary and anticompetitive — output on both appsincreased enormously.

Meta has also generated considerable consumer surplus in the US, he said. On the contrary, the acquisitions produced clear consumer benefits compared to the likely outcome in the but-for world.

Carlton also concluded that the economic evidence is inconsistent with any claim that there is a relevant product market for personal social networking services that is limited to primarily Facebook, Instagram and Snapchat. Contrary to the FTC’s claims, there is no economic evidence that a market for “personal social networking services” exists, the expert testified.

Carlton also argued that in a properly defined market that includes TikTok and YouTube, Meta does not possess a monopoly because it faces stiff competition from the two video-sharing apps.

The Meta expert told US District Judge James Boasberg that the FTC’s market is too narrowly defined. He cited empirical research such as a pricing experiment by another witness, John List, and other natural experiments such as the ban on TikTok in India in 2020, the ban on TikTok in the US in 2025 and an outage on Facebook in 2021.

Carlton said all the studies and events showed that users substitute Facebook and Instagram for YouTube and TikTok, and vice versa.

“Buying Instagram for $1 billion was a great investment,” Carlton said. “A great investment. It could have been dumb luck that Instagram was so great. Or Meta could have known what it was doing with Instagram. It’s just a grand slam home run.”

In baseball, a grand slam home run is a home run hit with the bases loaded, that is, all three bases occupied by runners. It results in four runs being scored, the maximum possible on a single play.

Meta Platforms co-founder and chief executive officer Mark Zuckerberg bought Instagram for $1 billion in 2012 and paid a whopping $19 billion for WhatsApp in 2014. Both companies were startups with very few employees and no revenue at the time, but were increasingly witnessing popularity among mobile phone users.

During cross-examination, FTC attorney Krisha Cerilli asked Carlton if he had analyzed whether any particular feature was added to Instagram or WhatsApp after the acquisition and whether it was merger-specific.

Carlton said he did not, but that he did study R&D and output.

Cerilli asked if he assessed or had opined on what portion of R&D was merger-specific.

“I think it’s fair to say I have not attempted to quantify the extra R&D that the acquisitions might have created. My report on the amount of R&Dsaid that it’s high, and that I don’t see any basis to assume it would have been higher, and Professor Hemphill provides no such basis,” the expert replied.

The FTC attorney then asked about Carlton’s expert report, in which he raised questions about competition in the but-for world and suggested that Instagram might have run into difficulties competing in the relevant market because Meta might go into destroy mode against it.

Carlton replied that his report suggested that if Instagram went into competition in the “friends and family” sharing segment against Facebook, then “Facebook could respond.”

The Meta expert spent nearly all day on the witness stand. Following his roughly six-hour testimony, Meta rested its case.

“Today, we rested our case against the FTC’s weak antitrust lawsuit. After six weeks trying their case to undo acquisitions made over a decade ago and show that no deal is ever truly final, the only thing the FTC showed was the dynamic, hyper-competitive nature of the past, present and future of the technology industry,” a Meta spokesperson said in a statement.

“Meta is a proud American success story, and we look forward to continuing to innovate and serve the people and businesses who love our services,” the spokesperson said.

The FTC will present a rebuttal case on Tuesday by bringing Hemphill back to the stand.

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