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The opening week of the Meta antitrust trial has unveiled significant details regarding the tech giant’s early 2010s approach to the burgeoning Instagram and the perceived competitive challenge it presented. Court documents and internal communications reveal how the social media conglomerate, then known as Facebook, grappled with the rising popularity of the photo-sharing application.
The U.S. Federal Trade Commission (FTC) contends that Meta engaged in unlawful monopolistic practices by acquiring companies like Instagram and WhatsApp, which posed a threat to Facebook’s market dominance. The FTC’s legal team aims to demonstrate that these acquisitions stifled competition. A successful outcome for the FTC could lead to a court order compelling Meta to divest itself of Instagram and WhatsApp.
During the trial, the FTC presented substantial evidence indicating Facebook’s acute awareness of Instagram’s potential threat as the photo-centric platform gained traction. Internal Facebook emails presented as evidence reveal company executives’ anxieties concerning Instagram’s rapid growth and internal discussions about the financial considerations of a potential acquisition.
Furthermore, these executive communications exposed alternative strategies considered by Facebook to mitigate Instagram’s expanding influence. These strategies included emulating Instagram’s core functionalities by launching a rival application, or acquiring Instagram with the intention of limiting its further development while prioritizing Facebook’s own products.
Government prosecutors argue that these internal exchanges highlight Facebook’s strategy of either acquiring or suppressing competitive threats. The disclosed messages not only illuminate the company’s competitive mindset at the time but also underscore the aggressive tactics that facilitated Meta’s ascent to its current status as a social media behemoth.
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Key excerpts from these internal communications are outlined below.
Executives Express Concerns Over Instagram’s Rapid Growth
- “Instagram seems to be expanding rapidly. In just four months, they have reached two million users and 30,000 daily photo uploads. This is significant and warrants close monitoring. Additionally, it appears Dropbox is also making a significant push into photo sharing.” — Mark Zuckerberg, February 2011
- “If Instagram continues to excel in the mobile space, or if Google acquires them, they could, in the coming years, easily incorporate features that mirror our current offerings. If they accumulate a substantial repository of user photos, it poses a genuine challenge for us. Their user base is currently expanding at an extraordinary pace, seemingly doubling every couple of months and already reaching approximately 5-10 million users. While launching a compelling product of our own will likely attract many users and deter future Instagram adoption, each month of delay magnifies their growth, making it progressively harder for us to overcome.” — Mark Zuckerberg, September 2011
- “The photos team is now almost entirely dedicated to a new mobile photo application, as we observe Instagram’s straightforward photo-sharing application gaining significant traction (and even our own application is experiencing substantial growth… mobile uploads have increased to 17.7M per day, a +5.3 week-over-week increase). Similar to Beluga, witnessing their rapid expansion validates our approach of simplifying our mobile experience and providing dedicated messaging and photo applications separate from the overarching application.” — Chris Cox, Chief Product Officer, February 2011
- “A concerning trend is the widespread daily usage of Instagram, encompassing a diverse user base from non-technical acquaintances to Facebook employees. Notably, users are selectively uploading only some of their photos to Facebook. This represents a substantial gap for us, unlikely to be fully addressed by our existing platform or social dynamics initiatives.” — Mark Zuckerberg, February 2012
Facebook Explores Instagram Acquisition and Potential Development Halt
- “I wonder if we should consider acquiring Instagram, even at a valuation of around $500 million. Currently, they possess two key assets we lack: a superior camera interface and a photo-centric sharing network.” — Mark Zuckerberg, February 2012
- “It’s quite plausible that our initial assessment was incorrect, and their approach is validated – users may prioritize capturing high-quality photos over immediate Facebook sharing. We should consider a significant investment to acquire them.” — Mark Zuckerberg, February 2012
- “I believe there’s a strong argument to be made for acquiring Path, Pinterest, Instagram, Evernote, and any other company we admire or that is currently thriving if: (1) we can structure the deals to maintain their product operations while transitioning their teams to focus on Facebook initiatives; (2) we believe their teams are passionate about building exceptional products and we can secure their commitment to work on our platform for 4+ years.” — Samuel W. Lessin (Former Facebook VP of Product), in correspondence with Mark Zuckerberg, February 2012
- “My proposed strategy involves maintaining their product’s operation but ceasing further feature additions. We would redirect future development towards our own products, integrating all their camera functionalities into ours. By not discontinuing their products, we mitigate potential user backlash and prevent the immediate emergence of a market void for competitors to exploit. However, all subsequent development efforts would be concentrated on our core products.” — Mark Zuckerberg, February 2012
- “One perspective is that we are essentially purchasing time. Even if new competitors emerge, acquiring Instagram, Path, Foursquare, etc., now provides us with a year or more to integrate their dynamics before any competitor can approach their scale again.” — Mark Zuckerberg, February 2012