On the second day of an antitrust trial in Washington, it was revealed through an email that Meta CEO Mark Zuckerberg once considered the idea of separating Instagram from its parent company due to concerns over antitrust litigation. This trial alleges that Meta has illegally monopolized the social media market.
In a 2018 email, Zuckerberg expressed that he was contemplating whether “spinning Instagram out” would be necessary to achieve significant goals as technology companies continue to expand. He also mentioned there was a considerable possibility that Meta might have to separate Instagram and possibly WhatsApp within five to ten years. Despite most companies opposing breakups, Zuckerberg noted that historically companies tend to perform better after being divided.
During the proceedings, attorney Daniel Matheson, representing the Federal Trade Commission in the antitrust case, asked Zuckerberg which corporate history instances he referred to in his email. Zuckerberg replied that he did not recall his exact thoughts at the time.
Zuckerberg, presenting as the first witness, testified for over seven hours across two days. The trial could potentially result in Meta being forced to divest Instagram and WhatsApp, which are startups acquired by the tech giant more than ten years ago that have since become prominent in social media.
While questioning Zuckerberg, Matheson highlighted his reference to Instagram as a “rapidly growing, threatening, network” and noted discussions about neutralizing a competitor by purchasing the company. However, Zuckerberg emphasized his excitement about acquiring Instagram to enhance product offerings. He explained that Facebook was developing a camera app for mobile sharing, but believed Instagram was superior, motivating his intent to acquire it.
Zuckerberg contested Matheson’s interpretation that the acquisition aimed to neutralize a threat, indicating that this characterization misrepresented his email’s intent. Throughout the questioning, Matheson referenced numerous emails, some dating back more than a decade, involving Zuckerberg and his team, related to the Instagram acquisition. Though acknowledging these documents, Zuckerberg often sought to minimize their implications, stating they were penned during the initial consideration of the acquisition and did not fully encapsulate his interest.
Matheson also cited a February 2012 message wherein Zuckerberg communicated to Facebook’s former chief financial officer that Instagram and another app, Path, had already established significant networks that could disrupt Facebook. Zuckerberg clarified that this was part of a broader discussion about potential acquisitions to hasten Facebook’s development.
Zuckerberg defended the decision to acquire companies to remove them from the market and build their own versions as a reasonable strategy.
Meta’s attorney, Mark Hansen, later commenced his questioning of Zuckerberg. In his opening remarks, Hansen underscored that Meta’s services are free and, contrary to holding a monopoly, face significant competition. He explored these points across over an hour of questioning, with more set for the following day.
Zuckerberg remarked on the competitive nature of the industry, suggesting that implementing fees for services like Facebook could deter users, given the availability of similar services elsewhere.
This trial represents a significant examination of the Federal Trade Commission’s capacity to challenge Big Tech, with the lawsuit originally filed against Meta, then known as Facebook, in 2020 during President Donald Trump’s administration. The case accuses the company of acquiring Instagram and WhatsApp to eliminate competition and form an unlawful social media monopoly.
Facebook purchased Instagram, then an ad-free photo-sharing app, for $1 billion in 2012. Instagram was the first acquisition Facebook maintained as a distinct app; previously, Facebook engaged in “acqui-hires,” a common Silicon Valley practice of buying startups to hire their skilled employees and subsequently dissolving the company. Two years later, Facebook replicated this approach with WhatsApp, acquired for $22 billion, both aiding Facebook’s transition to mobile platforms and appealing to younger demographics amidst rising competitors like Snapchat and TikTok.
However, the FTC’s definition of Meta’s competitive market narrowly excludes platforms such as TikTok, YouTube, and Apple’s messaging service from being considered rivals to Instagram and WhatsApp.
U.S. District Judge James Boasberg is overseeing the case, having denied Meta’s request for a summary judgment last year, necessitating the trial.
