Abstract
This paper investigates the short-run effects of platform market concentration on advertising prices, leveraging the temporary outage of TikTok in the U.S. in January 2025 as a quasi-exogenous shock to advertising demand and supply on competing social media platforms. While increased advertiser demand on other platforms would raise prices, more impression opportunities from users substituting to those platforms would lower prices, creating opposing forces on ad prices. We rely on publicly available data from the Meta Ad Library for ads in the “Social Issues, Elections, or Politics” category and construct a time series of ad spend and impressions across 30,000 advertisers. Using difference-in-differences to compare ads in the US and other markets, we find that the average cost per thousand impressions (CPM) increased by 10% on Meta platforms as a result of the outage. This price increase was driven by intensified competition on the demand side, with higher spend and more ads—especially among larger advertisers—that were not compensated by a proportional rise in impressions. The greater shift by relatively larger advertisers suggests that Meta platforms are a better substitute for them than for smaller ones. This implies that a TikTok ban would impose a disproportionate burden on small businesses.