What Makes a Monopoly Illegal in the U.S.

In the U.S., a company that’s big, dominates its market, and has high prices isn’t necessarily an illegal monopoly. Being the biggest and most powerful company in an industry isn’t a problem, the U.S. Supreme Court has repeatedly decreed, unless the company achieved its position unlawfully—that is, through exclusionary or predatory conduct intended to thwart competitors. To successfully challenge a dominant company, antitrust enforcers have to show that competition is harmed by behavior that has no procompetitive business rationale—such as blocking a rival’s access to the market by entering into exclusive distribution agreements. Here’s how to assess whether the companies are crossing a line.

It would be tough to show that Facebook’s acquisition of Instagram or WhatsApp violates antitrust laws. An enforcer would have to show that the only rationale for the purchases was to remove a competitive threat. The evidence would have to demonstrate that the acquired companies truly were nascent threats when they were acquired and that consumers have been harmed—through fewer privacy protections, for example—by the acquisitions. Facebook has said the purchases are opportunities for it to innovate.