Written by Rohan Girvin
Background
Markets can take many forms. Economists often work in the realm of perfect competition, assuming that there are many buyers who care only about prices and sellers who produce identical products and services. Due to each firm’s relative smallness compared to the market as a whole, no single firm can influence the market price. However, in practice, perfectly competitive markets are hard to come by and are more based in theory than reality (Gallant, 2020). Still, the paradigm of perfect competition remains, and government regulation often aims to bring the country closer to a perfectly competitive ideal world.
One vehicle through which the government regulates is through antitrust legislation. Antitrust legislation is laws and regulations aimed at protecting the competition within a market. Through facilitating mergers and acquisitions and ensuring balanced market power to prevent collusion and cartel formation, antitrust laws are always at play in American business and economics (Twin, 2024).
These laws are necessary for the American economy in a variety of ways. For one, prioritizing competition is to the benefit of consumers. By helping to prevent monopolies, antitrust laws ensure that consumers are presented with lower prices, higher quality products, and a larger variety of choices. Additionally, allowing for competition fosters greater innovation as companies constantly need to evolve to stay at the forefront of their industries; not only does this reward companies that are advancing their respective fields, but it also benefits the greater economy through advancements that can impact the greater population. These benefits and the overall economic stimulation antitrust laws prove that they are indispensable for a modern free market economy (Twin, 2024).
Origins of Antitrust
The Sherman Antitrust Act of 1890, the brainchild of Senator John Sherman of Ohio, was the first federal legislation to outlaw monopolistic practices. Though several states had created antitrust laws at that point, these were limited by state lines, making the Sherman Act and its national scale all the more impactful. The act was supported by democrats and republicans alike, passing the Senate by a vote of 51-1 and in the House of Representatives unanimously (National Archives, 2019).
The Sherman Act was a response to many trust formations and anticompetitive business practices that were prevalent in the late nineteenth century. A famous example of this was John Rockerfeller’s Standard Oil Trust, formed in 1882. A board of trustees was created, and all of the Standard properties were put in the control of this group. Stockholders were allocated trust certificates depending on their share of Standard Oil stock, and all profits of these component corporations were given to the board in order to determine appropriate dividends. The board of trustees also made decisions on who the component company executives and directors would be, giving them all the power. A monopoly was essentially formed as the board held control of all the component companies (National Archives, 2019).
The Sherman Act gave the federal government the power to dissolve these monopolistic unions, in order to promote fair business practices. With that, the act hoped to increase the welfare of consumers and create a healthy business environment for new and existing firms to coexist, allowing firms to gain a competitive edge through product improvement rather than sly trust formation (National Archives, 2019).
The Progressive Era
In the Progressive Era, prominent politicians had antitrust as a high priority item on their agendas. President Theodore Roosevelt sued many companies for a breach of the Sherman Act, and his successor, William Howard Taft followed in his footsteps (Phillips, 2019). Furthermore, in 1902, Theodore Roosevelt halted the formation of the Northern Securities Company, which was aiming to monopolize railroad travel in America’s Northwest (Cooper, 2019).
However, in the early years of the Sherman Act, many were still dissatisfied with the weak and vague terms. The Sherman Act didn’t explicitly detail which practices were anticompetitive, leading to continued exploitation. Many anticompetitive combinations, even those that were very apparent to the public eye, were largely left unregulated until the turn of the century. Predatory pricing, anti-competitive mergers, and exclusive under-the-table deals were still laying ruin to smaller businesses (The Clayton Antitrust Act, 2006).
The Sherman Act was rarely used against the large industrial monopolies it was created in part to disband. In the few times when it was invoked, it was not done so successfully, as the verbiage allowed for differing interpretations of what constituted these illegal activities (Britannica, 2019).
In 1914, the Clayton Antitrust Act was created to supplement the groundwork laid by the Sherman Act some 24 years prior and fill in the gaps that the Sherman Act missed. To supplement the Clayton act came the formation of the Federal Trade Commission, a government body created solely to enforce antitrust laws. This act fully prohibited anti-competitive mergers and predatory pricing, seeking much of its inspiration from the Sherman act but being clear and stern in its regulation (The Clayton Antitrust Act, 2006).
Global Perspective on Antitrust Shift
Globally, many developed nations took after the U.S. model of antitrust regulation. In 1957, the European Union developed the Treaty of Rome. In its signing, the Treaty of Rome formed the European Economic Community, with six participating countries – Belgium, France, Germany, Italy, Luxembourg and the Netherlands – with the goal of creating a common market to boost economic growth and stimulate trade. The Treaty on the Functioning of the European Union (TFEU), the new term for the Treaty of Rome, established clearly outlined rules and regulations regarding competition law (European Commission, 2024). Article 101 of the TFEU prohibits cartel formation and other agreements that would harm the conditions within the European Economic Area’s internal market. Article 102 restricts dominant firms from taking advantage of their position to collude in price fixing activities or attempt to flush new entrants from entering their industry (European Parliament, 2019).
European competition laws, which developed much later than the American competition laws, sought much inspiration from the American system that preceded it by nearly 70 years. In a speech delivered in 2001, Mr. Mario Monti, the European Commissioner for Competition Policy, credited American trailblazing in the antitrust realm as an inspiration for the current state of the European stance and noted that the shared goal of protecting consumer interest is a common concern that unites American and European policy (Monti, 2001).
The Current State of Antirust
Understanding the historical context of antitrust helps lay the foundation for applying similar principles to today’s economic climate. However, with big tech companies and CEOs of trillion-dollar conglomerates holding more power than Presidents and Prime Ministers, the competitive environment has drastically changed.
This is partially due to the presence of network effects. The network effect is a phenomenon claiming that for certain products, an increase in the number of users improves the value of the goods or service to all users. Consider, for example, an e-commerce website like eBay or Etsy; these sites are more valuable to buyers as more sellers join and post their products and are more valuable to sellers as more buyers enter the market to purchase their goods. Food delivery platforms, including Doordash, Grubhub, Uber Eats, and Deliveroo, benefit users of the service as more join; more restaurants joining these sites is to the benefit of the consumer, allowing them more choice, and more consumers on the site increases sales for the restaurants (Banton, 2022).
With these network effects, large media companies are able to gather massive user bases and essentially create natural monopolies, formed without any major violations of antitrust laws. Instagram, which has over 2 billion active monthly users, has been able to attract a quarter of the world’s population to use its platform (Kumar, 2025). As this number increases, it only attracts more people to join the user pool. Apple, which has many product features that favor interactions with other Apple products, reported having upwards of 2 billion active devices (Shakir, 2023). Both of these products benefit from the presence of network effects and have created large imbalances in market power that are hard to regulate with the current state of competitive policy (Banton, 2022).
Furthermore, personal data is an impactful confounding variable in the market dynamics of digital products. The more users a site or service hosts, the more data they receive, meaning individuals make an unexpected trade each time they open their phones. With few large firms having access to vast amounts of personal data, they use advanced algorithms to customize the content they show users, feeding into their predispositions and fortifying their habits. Due to this concentrated data control, it is as if a few large firms have a monopoly over personal data, and strategically manipulate personal data to create barriers to entry (Crandall et al., 2023).
An additional complication is at play when considering that in the digital era many products are free to use, and thus, many markets are Zero-Price Markets. Consider the large social media platforms or major search engines that don’t charge a fee to use their product, but rather make money through running advertisements. There’s a common phrase that goes, “if you’re not paying for the product, then you are the product,” which is exactly the case in zero-price markets. While consumers feel as though they are receiving a costless benefit, the reality is that their time, attention, decision-making, and personal data are the true products that these apps and sites auction off to others (Newman, 2014).
Case Study: Meta
Meta, formerly known as Facebook, has faced claims that they have engaged in illegal monopolization through the acquisitions of Instagram (2012) and WhatsApp (2014). The Federal Trade Commission has alleged that Meta’s purchase of Instagram and WhatsApp was an attempt to ease competition by absorbing them. “They decided that competition was too hard and it would be easier to buy out their rivals than to compete with them,” alleged Daniel Matheson, FTC lawyer. Mark Zuckerberg, CEO of Meta, and Meta’s legal team have disputed these claims, arguing that they purchased them to “improve and grow them alongside Facebook,” (Jamili, 2025).
Zuckerberg, in email chains and memos has, however, used language that is indicative of anticompetitive intentions; he said it was better to buy than to compete and used the term “neutralizing” when referring to the competition Instagram posed. Regardless, Zuckerberg and his team stood their ground, asserting that these acquisitions were to the benefit of Meta’s consumers (Jamili, 2025).
The FTC demanded $30 billion from Meta to drop its case, though Zuckerberg counter-offered with $450 million, just 1.5% of the FTC’s asking price. It’s believed that Zuckerberg has been supportive of President Trump in recent months, even donating $1 million to his inaugural fund in an attempt to be bailed out. Zuckerberg is confident that President Trump would back him and has been pushing him to intervene. Former FTC Commissioner Lina Khan called this counter-offer “delusional” and blasted Zuckerberg’s attempts to avoid damages: “Mark bought his way out of competing, so I’m not surprised that he thinks he can buy his way out of law enforcement, too,” (Mattioli et al., 2025).
The Federal Trade Commission is looking to make Meta either restructure their business or sell Instagram and WhatsApp. An FTC win could prove disastrous to Meta; although Meta doesn’t release app-specific revenue numbers, it is estimated that Instagram will generate over half of Meta’s U.S. based ad-revenue. Although WhatsApp doesn’t contribute significantly to Meta’s revenue figures, it hosts the most daily users and new implementations of “business messaging” services are expected to provide an opportunity for a wave of growth (Godoy, 2025).
While the legal foundation of antitrust adapts to regulate the changing markets, Meta’s seemingly anti-competitive practices are debatable. However, if the FTC gets what it wants, global media could look very different.
The Future of Antitrust
With a digital market with little semblance of the market framework that antitrust laws were designed for, there is no simple solution to ensuring proper competition amongst. Though the goal of the Sherman and Clayton acts was to promote ample competition and forbid unfair business practices, large corporations that capture enormous market share are more common than ever before. Using network effects and data dominance as a shield, monopolies are able to form without direct violations of existing competition laws. Under the Biden administration and the Chair of the Federal Trade Commission, Lina Khan, America was progressing towards the adaptation of competition laws to suit the changing times (Jones, 2025). However, under President Trump’s appointee, Andrew Ferguson, and the Trump administration’s economic goals, it is unclear if antitrust will be prioritized or if efforts will be focused elsewhere.
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