Meta’s Threads: Effects on Competition in Social Media Markets

Mark Zuckerberg has found a new product that consumers are interested in, and it is not the metaverse. Threads, the latest standalone app from Meta, has reportedly recruited over 100 million users since its launch on July 5—outpacing early growth rates of ChatGPT, TikTok, and other popular services. Meta envisions Threads as a “new, separate space for real-time updates and public conversations.” Threads is widely seen as a direct challenge to Twitter, with similar functionalities to share and respond to short written excerpts, which could allow Meta to extend into the text-focused social media space in addition to its typical Instagram or Facebook audiences.

Any direct market expansion by Meta, such as Threads, should raise questions over its potential effects on competition and consumers. Social media is one of the most concentrated markets in the United States, and Meta has historically dominated the industry. In 2022, Twitter had an estimated 370 million users and $4.6 billion in revenue internationally, merely a fraction of Instagram’s approximate 2.3 billion users and $51.5 billion in revenue. According to traditional antitrust doctrine, lack of competition stifles consumer choice, hinders innovation, and reduces the quality of products and services. The social media industry is particularly susceptible to high barriers of entry like network effects, where a platform’s value exponentially increases with its number of users, which then favors dominant players like Meta over emerging startups. By exclusively allowing Instagram users to automatically import their existing follower lists to Threads, Meta has capitalized on its incumbent advantage over other nascent Twitter rivals like Mastodon, Substack Notes,, and Bluesky.

But while Threads could worsen consolidation in the social media market overall, it could possibly improve competition among text-based networking platforms more narrowly, especially if it places additional pressure on Twitter to improve its service. Since taking over the company in October 2022, Elon Musk has made numerous unpopular decisions that have damaged its advertising revenue and user engagement, like limiting the number of daily posts that individuals can view, firing trust and safety employees, and revamping the verification system in ways that facilitate impersonation. Even though satisfaction with Twitter has reached an all-time low, consumers generally have lacked comparable options to switch to.

But even if Threads persists as a long-term direct competitor to Twitter, it is not yet clear whether it will produce theoretical benefits like more robust innovation. For one, Threads primarily replicates existing Twitter features, instead of evolving or creating superior ones. (Meta has a long history of duplicating competitors’ products, including by modeling Instagram Stories after Snapchat and Instagram Reels after TikTok.) For another, Musk has primarily responded to market challengers with anticompetitive measures like blocking external links and threatening litigation towards potential rivals—and not by upgrading its platform or fixing the growing prevalence of misinformation and spam on Twitter.

Even if Threads proves successful among users (i.e., if it can maintain strong registration and retention rates in the coming months), it will likely face regulatory scrutiny. In 2021, the Federal Trade Commission (FTC) filed an ongoing challenge to Meta’s past acquisitions of Instagram (2012) and WhatsApp (2014), alleging that Meta had engaged in a “buy-or-bury” strategy to stifle emerging competitors. This lawsuit demonstrates the FTC’s rising attention to consolidation in the social media market, as well as interest in how high barriers to entry and anticompetitive actions cement the status quo.

However, there are several key differences between Meta’s approach to Threads versus Instagram. First, Meta developed Threads in-house—it did not buy or acquire it, as it did Instagram. Second, Threads seeks to rival Twitter, which is an incumbent platform and not—as Instagram was—a nascent competitor on the rise. Even so, Threads’ business model contrasts with proposed U.S. bills, like the American Innovation and Choice Online Act, which aim to limit anticompetitive actions that artificially inflate consumer engagement based on incumbency status—such as self-prioritizing Threads sign-ups through Instagram and conditioning Threads registration on Instagram use.

Meta reportedly has held off on introducing Threads in the European Union due to compliance concerns with the Digital Markets Act (DMA). Once the European Commission begins to enforce the DMA in 2024, Meta will likely qualify as a “gatekeeper” platform subject to new ex-ante competition rules that would directly affect Threads operations. The DMA prohibits gatekeepers from requiring users to register for multiple platforms to use a primary service—which would contradict a requirement for new Threads users to link to existing Instagram accounts. The DMA also prevents gatekeepers from combining user data across multiple subsidiaries, which would prevent Meta from using Instagram data to advertise on Threads or vice versa. It also bans dominant platforms from creating unreasonable obstacles to stop users from exiting a service; Threads allows users to deactivate their accounts but does not currently offer an option to delete them.

Antitrust regulators have increasingly acknowledged the cyclical relationship between market control and big data accumulation, which could affect any future monetization of Threads—especially if it plans to eventually expand into the European Union. Although Threads does not currently serve advertisements, it still collects sensitive personal information like browsing activity, location, biometric, and health information, and presumably shares it across Meta apps. On July 4, the European Court of Justice (ECJ) ruled in favor of German antitrust enforcers which sought to compel Meta to obtain consent under the General Data Protection Regulation before combining Facebook and Instagram data to target ads. In their decision, the ECJ recognized that privacy is also an antitrust enforcement concern since Meta’s vast data collection practices both help establish its market dominance and vice versa. Meanwhile, the FTC’s 2021 complaint alleged that Meta’s dominant market position empowered it to engage in privacy abuses because users did not have equivalent alternatives to turn to, although this lawsuit is still ongoing and not guaranteed to succeed.

At this early stage, it remains to be seen whether Threads will be a net positive or negative for competition in digital markets. Threads has emerged as the most serious competitor to Twitter 2.0, as nascent text-based startups like Mastodon and Substack Notes have struggled to get off the ground without the power of network effects. Yet, its rapid growth primarily reflects Meta’s market dominance, and not any revolutionary quality or innovation within the product itself. As U.S. antitrust legislation faces an uphill path in the 118th Congress, and Threads is not subject to the DMA outside the European Union, Meta might offer an alternative to Twitter, but not the most satisfying one. It may be difficult for regulators or social media users to get excited about the choice between two large platforms that both engage in questionable privacy and anticompetitive practices, without updated U.S. legislation to keep them in check.

Caitlin Chin is a fellow with the Strategic Technologies Program at the Center for Strategic and International Studies in Washington, D.C.