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Zuckerberg Defends WhatsApp Acquisition in Antitrust Trial
In the waning moments of his testimony at a Washington, D.C. courthouse, Meta CEO Mark Zuckerberg briefly smiled, a rare display of emotion during intense questioning. This moment occurred as Meta’s lead attorney inquired about Zuckerberg’s “happiness” regarding the company’s $19 billion purchase of WhatsApp in 2014. The Federal Trade Commission (FTC) is challenging this acquisition, arguing it was anticompetitive as part of a broader antitrust lawsuit against Meta, formerly Facebook.
“I’d Do It Again”: Zuckerberg’s Confidence in WhatsApp Deal
Zuckerberg, after a short pause and with a grin, firmly stated, “I’d do it again.” This declaration underscores the central point of his defense: that acquiring WhatsApp was a strategic move to enhance Meta’s services, not stifle competition in the social media and messaging landscape.
FTC Challenges Meta’s Acquisitions of Instagram and WhatsApp
The FTC’s antitrust case aims to dismantle Meta’s dominance by forcing the divestiture of Instagram and WhatsApp. The trial, which commenced on April 14th, saw Zuckerberg spend approximately 13 hours over three days addressing concerns from both FTC and Meta lawyers. A primary focus of Wednesday’s proceedings involved refuting the FTC’s core argument: that Zuckerberg’s acquisitions were strategically designed to eliminate potential competitors, rather than improve existing platforms.
Messaging App Competition: WhatsApp’s Role
The FTC posits that Meta’s acquisition of WhatsApp was motivated by anxieties within Zuckerberg’s executive circle that private messaging applications could evolve into comprehensive social media rivals. Zuckerberg acknowledged considering this possibility but deemed it “extremely unlikely” for WhatsApp to challenge Facebook after engaging with WhatsApp’s co-founders, Jan Koum and Brian Acton.
WhatsApp Founders’ “Disdain” for Social Media
Zuckerberg emphasized the WhatsApp founders’ deep aversion to social media and advertising. He claimed he gradually encouraged them to incorporate social features, such as Stories, into WhatsApp post-acquisition. An email presented in court revealed Zuckerberg describing Koum as “unambitious” following an initial meeting, noting WhatsApp’s limited aspirations for expansion prior to the Facebook deal.
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Strategic Value and Apple/Google Leverage
Zuckerberg argued that WhatsApp’s burgeoning popularity indicated a significant shift in online communication, with users increasingly migrating from public platforms like Facebook News Feed to private messaging. He justified the record-breaking acquisition cost by highlighting WhatsApp’s “valuable” contribution to Facebook’s navigation of this evolving trend. Furthermore, he viewed WhatsApp as crucial “leverage” in Meta’s often strained relationship with tech giants Apple and Google.
Negotiating Power with App Stores
“We’re constantly concerned about them interfering with us,” Zuckerberg stated, referencing Apple and Google’s control over app distribution through their respective app stores. He believed acquiring WhatsApp would bolster Meta’s bargaining position when addressing potentially unfavorable app store policies. However, he conceded, “(I’m not sure how much this actually helped.)”
WhatsApp’s User Growth and Revenue Generation
Pre-acquisition projections presented to Facebook’s board anticipated WhatsApp reaching 2 billion users by 2024. Zuckerberg disclosed in court that WhatsApp currently boasts nearly 3 billion users and generates $10 billion annually from advertisements directing users to engage with businesses across WhatsApp, Instagram, and Messenger.
Instagram’s Trajectory and Competitive Concerns
Earlier testimony revealed Zuckerberg’s initial lack of concern regarding Instagram as a competitor until it amassed 1 billion users, years after its acquisition. Subsequently, fearing Instagram’s potential to cannibalize Facebook engagement, he instructed the Instagram team to reduce reliance on Facebook feature integrations for traffic.
Instagram Founders’ Departure and Success
Instagram’s co-founders, Kevin Systrom and Mike Krieger, reportedly reacted negatively to this directive. They resigned from the company shortly thereafter, although Zuckerberg repeatedly noted Systrom’s extended leadership of Instagram beyond initial expectations.
Meta’s Resources Fueling Instagram’s Growth
Throughout questioning, Zuckerberg underscored the resources Meta provided Instagram in its early stages to combat spam and масштабировать operations. Internal documents presented to the court indicated Instagram had a mere 10 million users at the time of acquisition. Zuckerberg asserted it “extremely unlikely” Instagram would have achieved comparable success independently. He and Systrom initially aimed for 100 million users post-acquisition; Instagram now exceeds 2 billion users.
Acquisitions as Investments, Not Anti-Competitive Measures
In summary, Zuckerberg’s final day of testimony portrayed the acquisitions of Instagram and WhatsApp as exceeding even his optimistic projections, rather than representing a “catch-and-kill” strategy intended to solidify a monopoly as alleged by the FTC.
Sandberg Admits Initial Doubts, Now Sees Acquisition Value
Later in the day, Meta’s former COO, Sheryl Sandberg, testified. She was questioned about an email to Zuckerberg around the time of the $1 billion Instagram acquisition, in which she expressed concern that they were overpaying.
“I believe I was mistaken,” she acknowledged on Wednesday. “Seriously mistaken.”