Mark Zuckerberg on the witness stand: Selling Off Instagram, WhatsApp, and Their Apparels: a glimpse at the FTC’s monopoly power
These were some of the ideas that Meta CEO Mark Zuckerberg considered over the years as he built his social media empire. He discussed them in detail from the witness stand at a federal courthouse in DC, where Meta is fighting the FTC on an antitrust case that might require it to sell off the two mobile messaging services.
“We really need to get our act together quickly on this since Instagram’s growing so fast,” Zuckerberg wrote in another internal email shown to the court. In a separate exchange with an engineering executive working on Facebook Camera, Zuckerberg tried to instill a sense of urgency: “If Instagram continues to kick ass on mobile or if Google buys them, then over the next few years they could easily add pieces of their service that copy what we’re doing now.”
His second day on the witness stand was at times tense, with FTC lawyer Mark Hansen repeatedly pointing Zuckerberg to old internal emails, trying to illuminate the CEO’s thinking ahead of Meta’s 2012 Instagram purchase for $1 billion and its 2014 take-over of WhatsApp for $19 billion.
The FTC started to dig in on the acquisition of the social network. In an email, Markwitz warned colleagues that the early growth of his photo sharing website was really scary for Facebook. He complained about the slow pace of development of Facebook’s own photos app, Facebook Camera, and described members of the team as “checked out.”
Other documents presented at trial gave a backstory to the big decisions Meta made over the years, along with a view of what some alternate realities might have looked like. It is possible that there could have been another acquisition had the CEO accepted the $6 billion bid for the company from Facebook. If Spiegel had said yes, Meta would have grown Snapchat much faster, he speculated from the stand.
The FTC believes that the only way to resolve Meta’s monopoly power is for it to be broken up. In legal filings, government lawyers say a judge should order Meta to spin off Instagram and WhatsApp into separate companies.
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This is not the first time the tech executive has testified under oath. He apologized to the parents of the audience when he spoke to Congress on child safety, the 12th time he has addressed the Congress.
William Kovacic, former Republican chair of the FTC, said the judge in the case, U.S. District Judge James Boasberg, will likely be weighing the rationale Zuckerberg provided for the Instagram and WhatsApp buys.
Supporters of the FTC’s case against Meta fear Trump could still intervene in the case by instructing the federal agency to settle in the midst of the trial.
Former FTC Chair Lina Khan, who advanced the case during the Biden administration, said Monday on CNN that the president meddling in the case is “a constant worry that we all need to stay very vigilant about.”
Shortly after he was sworn in, the Federal Trade Commission’s lead attorney for the case, Daniel Matheson, asked Zuckerberg to reflect back on when Facebook was the underdog.
Chief Judge James Boasberg admitted before the trial that he hadn’t used a Meta service, and it seemed at least partly to provide historical context for him. (At one point, Boasberg asked the Meta CEO for a crash course on what “native code” meant. Zuckerberg eagerly obliged.)
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In court, Zuckerberg downplayed the threat Instagram posed to Facebook at the time. He said “Yes,” when asked if the two applications were trying to connect friends with each other. “Was that the main thing that was going on? Not to my recollection.”
During Meta’s opening arguments, the company’s lead lawyer Mark Hansen argued that the FTC’s market definition is artificially narrow by excluding TikTok, iMessage, and other services. The case is a grab bag of FTC theories at war with the facts and the law.
The FTC will have to show over the next few weeks that Meta acted illegally in order to achieve or maintain its dominant position in a relevant market.
The company was able to hear Meta retell it because of opportunities where it can invest and grow new products. The FTC thinks that the popular applications would have been fine on their own.
Another FTC theory is that Meta has been able to increase its ad load over time because its users don’t have alternative services. Meta may have considered giving its users a feed of ads because it thought they were as good as regular content.
When he was wondering about how to bring some early magic back to Facebook in 2022, Zuckerberg suggested the idea of wiping users’ friends lists to experience the joy of starting from scratch. He even considered beating the government to the punch by spinning off Instagram — the very app he’s now fighting so hard to keep.
From Silicon Valley to Capitol Hill: A senior policy reporter on tech policy and the intersection of Silicon Valley and Silicon Valley (invited press release)
The intersection of Silicon Valley and Capitol Hill has been covered by a senior policy reporter. She spent 5 years covering tech policy at CNBC, writing about antitrust, privacy, and content moderation reform.