Antitrust

Facebook has at points worried about cannibalizing its flagship platform by promoting users moving to Instagram. Instagram co-founder Kevin Systrom described this in his testimony as Meta depriving Instagram of resources to favor Facebook Blue. But Olivan says it’s okay for one side of the business to shrink a little if growth expands overall. “As long as this one grows much more, I’m willing to take a little hit on the other one,” he says.

“Out of all the potential buyers, I thought Google and Apple would be the worst ones because they already ran the operating systems of the phones,” Olivan testifies. They were “particularly dangerous acquirers because they have an unfair advantage on us” by running the underlying operating system, he says.

Olivan describes a “huge chain of ifs” that might have led Google to becoming a significant social player in at least some countries around the world, had it acquired WhatsApp — something he and other Facebook execs feared in 2012. Two of those “ifs” would be if Google would run a social app without killing it, and whether it could convince WhatsApp’s founders to add social features, which they infamously resisted.

“The plan was to figure it out down the line,” Olivan testifies about the $19 billion acquisition. After all, he says. “Mark didn’t have a plan for how to monetize Facebook when he started it, either.”

In 2013, the company’s-then director of corporate development Amin Zoufonoun wrote that perhaps Facebook needs “a separate, free sms focused and branded messenger product to compete in this space if we cannot buy whatsapp. Zoufonoun worried “that FB messenger, with its legacy connotations may not do it in the space defined by whatsapp no matter what we do.” Olivan, who had recently taken over the Messenger team, advocated for improving the existing app, instead.

Even though Facebook closely tracked WhatsApp’s growth in 2012 and 2013 alongside other mobile messaging apps — some of which were adding social features — Olivan says they were not concerned about WhatsApp trying to become a social network. The app only aimed to be a replacement for SMS messaging in countries where telcos charged high rates for the service, Olivan testifies. Still, several documents show Facebook executives tracking WhatsApp’s growth with concern about how it stacked up to Facebook Messenger’s.

Olivan opposed letting competing messenger apps advertise on Facebook’s platform because he worried it was a bad tradeoff to a make a quick buck. He’s testified repeatedly he doesn’t like to help competitors, and wrote in a 2013 email that “we will look like complete idiots if we lose our business to these messenger services and help them along the way for a couple of $s.” He testifies he was “being a bit hyperbolic.”

Olivan testifies that he was “paranoid” as head of growth in 2012 about the expansion of mobile messaging apps into social apps, especially in countries where Facebook’s flagship app had less of a stronghold. In a 2012 message, Olivan told a colleague he worried that the shift to mobile combined with “messengers growing organically with huge retention and virality = potential recipe for not be around in a couple ... years from now.”

Olivan, who previously managed Facebook’s messaging efforts, asked staff in a 2012 email to “compile a ‘this shit is getting scary deck’ given all the data we have now” about the growth of messaging apps worldwide, which were also adding social features. Olivan wanted to circulate the deck to Facebook leadership “with a message: we really need to double down on messenger / our messenger is broken.”

Olivan is poking holes in the FTC’s market definition which relies on the way users come to Facebook and Instagram to connect with friends and family they know in real life. He says he’s actually been surprised to learn there’s some users who engage on Facebook without any connections at all — though he can’t say how many people that is.

Microsoft Azure executive Jason Vallery gives even more detail about how cloud services can help companies efficiently run their businesses at relatively low cost, even without their own massive data centers. Again, this speaks to the FTC’s argument that a company like Instagram could have scaled without Meta’s help. In a 2023 deposition, Vallery talks about how customers use cloud services for their cost, capability, and security benefits.

In a 2023 deposition, AWS general manager for sales Jason Bennett testified about how companies use its services to run their businesses. Instagram used AWS prior to its acquisition, but we’ve also heard from other AWS customers like Pinterest and Reddit. The testimony seems meant to demonstrate that Instagram theoretically could have scaled with AWS, even without access to Meta’s infrastructure.

Benjamin Davenport, who became part of Facebook Messenger’s founding team after his mobile messaging app Beluga was acquired, testified in a 2022 deposition that he worried in 2012 that Google could acquire WhatsApp and “bake it into Android.” Google could then make WhatsApp the default option on the operating system, and quickly growing its distribution, he says. Davenport wrote in a 2012 message that Google could create “a cross-platform iMessage with a far larger network.”

In a 2017 competitive assessment, Pinterest warned that Instagram was “taking direct aim at our core turf.” On cross-examination, Meta is working to show that Pinterest actually does see itself in direct competition with its products. At the time, Pinterest noted there was a “rapid increase in customer overlap” with Instagram and the app was even “replicating” some of its own features, like the ability to save pictures.

The FTC has asked several witnesses today about their trust and safety operations and infrastructure investments, which might be a way to show that even apps without Meta’s backing can maintain robust operations — just as Instagram might have. Roberts testifies, for example, that she’s not aware of any concerns that staying on AWS servers would limit Pinterest’s growth in the future.

The app changed its category in the Apple app store from social to lifestyle around 2018, Roberts testifies. “When users come to Pinterest expecting it to be like other social media apps, they tend to be confused about how to use the product since people are not really forefront of the experience,” she says — it’s more about finding things they’re interested in. “It just doesn’t set the right expectation if people have a mental model of another social media company when they come to Pinterest.”

For our third live social media witness of the day, Pinterest’s former director of product management Julia Roberts is testifying about how the app caters its product to users. The FTC is highlighting how Pinterest is focused around users’ interests, rather than connecting with friends and family — an element it says is core to Meta’s dominance. Roberts testifies, for example, that unlike on a platform like Instagram, “following is not a big part of the Pinterest experience.”

In a video deposition, Reddit executive Winter Raymond, who leads the company’s ads and commercial legal teams, says Reddit hasn’t considered offering a social networking services. Raymond says users come to Reddit to find their community, and says the ability to use pseudonyms is very important to its users.

Meta’s attorney asks essentially one question of Ortega on cross-examination: does Strava compete with Facebook, Instagram, Snapchat, and Twitter for workout content? Ortega says these apps “can compete for content related to workouts,” and then is excused from the stand.

Unless that baby is in a running stroller, Ortega testifies. He’s helping the FTC make an important point about why it thinks the market Meta monopolizes should be considered distinct from other kinds of social apps: even though users can upload whatever they want through Strava’s post feature, that doesn’t mean they will stray from the norms of the app. “It’s all about fitness, and while you can post other stuff, it just doesn’t seem as relevant,” Ortega says.

Former VP of connected partnerships Mateo Ortega takes the stand to talk about the fitness app. It’s the second witness today who the FTC hopes will help distinguish Facebook and Instagram from other social apps. Ortega says he doesn’t really think of Strava as a social network, though in marketing it’s described itself as one specifically for athletes.

While looking at a 2015 survey where nearly a third of US social media users said they come to Twitter to keep up with friends and family, Coleman says that likely represents a misunderstanding of the product at the time. He says the survey “predates” when the company took steps to clarify how it was different from other social platforms by focusing on helping people connect with their interests.

Meta’s attempt to characterize X as a closer competitor to Facebook and Instagram appears to backfire. Coleman is surprised at how X describes itself in its own help center as a “service for friends, family, and coworkers to communicate and stay connected through the exchange of quick, frequent messages.” He says that’s not how most people would describe the service and says, “I don’t know who wrote that.” Coleman adds, “That’s pretty wacky.”

In a 2018 email, then-CEO Jack Dorsey responded to an employee question asking whether Twitter “should serve personal social network (conversation among acquaintances)” in addition to facilitating public conversations. Dorsey responded, “Yes, but we have to pick one to optimize for. There’s already a service out there that does personal network well, so let’s focus on our strength of interest network.” The FTC is trying to bolster its argument that Meta competes in a distinct market for personal social networking services, where users go to connect with friends and family.

Coleman says that just because X competes with everything from TV and screaming children for people’s attention, it’s not that useful to think of competition that way to improve a product. “It’s much more helpful to understand what people are trying to accomplish in their lives and to try to help them accomplish that,” he says. Once Jack Dorsey became CEO of Twitter, Coleman says, the company determined it was most useful for helping people follow the news and their interests.

The judge seems flummoxed by the platform’s reply feature. He asks what’s the point of responding to a tweet from a celebrity, like LeBron James. “He doesn’t care,” Boasberg says. Coleman says that part of what makes X special is that it’s “not uncommon for the public figures to reply back.”

We’re kicking off the third week of trial with X VP of Product Keith Coleman. He will help establish the relevant market that Meta competes in for this case. Coleman testifies that the core use case of X is talking about things that are happening in the world.

Testifying in the Google Search antitrust trial yesterday, Chrome general manager Parisa Tabriz said Chrome’s features and functionality owe to its “interdependencies” on other parts of the company, reports Bloomberg. She reportedly said over 90 percent of Chromium code has originated from Google since 2015.

The court is hearing from FTC expert Kevin Hearle and is also expected to hear from Discord’s Julia Tang. I’m back in the Google courtroom today following testimony DuckDuckGo’s CEO and executives from Microsoft and Yahoo’s search businesses. There’s no court on Fridays in the Meta case, but we’ll bring you live updates from this case again next week.

As reported earlier by The Information, data shown in court during the remedies portion of Google’s search antitrust trial says that as of last month, Google’s internal data counted 35 million daily active users for Gemini.

I’m running upstairs to a different courthouse media room to follow the Google search remedies case. In that trial, Perplexity Chief Business Officer Dmitry Shevelenko just took the stand. We’ll set this stream live again when there’s more to share from the Meta trial.

That’s what we’re hearing from the FTC’s expert witness, Professor Cliff Lampe, an expert on human-computer interaction. He’s affirming the FTC’s view that the way people use and see apps like Instagram and Facebook is different from how they use and view other apps like TikTok or Pinterest.

Stoop says the goal of the project had been to make uploading multiple photos to Facebook faster and more fun, and that it achieved that. After Facebook had finished a major technical overhaul of its iOS app, it just made more sense to integrate the features with the main app where users already existed, he says.

That’s how Meta is trying to frame the product on cross-examination. Stoop says the two had different distribution models and audiences, since Facebook didn’t have a public following feature at the time and was more focused on sharing photos with friends, while Instagram lets users follow people they didn’t know. He adds that Facebook continued the project after the Instagram acquisition, and his team grew from about 10-15 people to about 40-50 over two years.

An internal May 2012 document discussing how to discuss the launch of Facebook Camera lists key external “messages to avoid.” The first was, “Facebook Camera launches filters, like Instagram,” and the second was “Facebook squashes competition.” Stoop says they wanted to make sure the press wouldn’t pigeonhole the product and miss the bigger picture.

The FTC is attempting to demonstrate that Meta viewed its Facebook Camera app as a competitor to Instagram, and that until the deal to acquire Instagram, it was actively working to address its issues and release it. In notes to his team in January 2012 from what Stoop says is known within Meta as a “Zuck Review,” Stoop summarized Zuckerberg’s feedback. “Instagram is growing quickly,” he wrote, so getting Facebook Camera “out the door fast is a huge priority.”