Meta Platforms

Meta exhibits significant pricing power in its advertising business. Advertisers have continued paying higher rates for Meta’s ad inventory while achieving returns, evidenced by a 10% year-on-year** increase in average ad prices in 2025). The result is extremely high profit margins: 2024 operating margins were 42%), expanding year over year.

Even amid rising costs, Meta’s ad products (including new AI-driven tools) maintain premium pricing. This resembles a tollbooth model where demand is inelastic – advertisers need to reach Meta’s huge audience. While competition (e.g.

TikTok) and economic cycles could put some pressure on pricing, Meta’s historical track record of steady margin expansion indicates solid pricing power.