How big is too big? And when does a company become so big that the government is forced to step in and make it smaller? Politicians have been struggling with those questions for at least a hundred years. But as the latest generation of tech companies has taken shape, the questions are becoming more and more relevant to internet giants like Google and Facebook. There’s a new movement in Washington to break up those companies, whether through a Justice Department lawsuit or an old-school appeal to the Sherman Antitrust Act. It’s a struggle Microsoft fended off in the ‘90s, and it has only grown more urgent in the years since. As Amazon has taken a stranglehold of online retail, Jeff Bezos’ company has started to attract antitrust attention as well, with figures like Sen. Elizabeth Warren and Lina Khan taking aim at Amazon’s cutthroat competitive strategies. If it succeeds, it would be one of the most ambitious government projects in a generation — but success is still a long way off.
Mosseri testifies that “growth is everything” to Instagram and the company was deeply concerned to see feed impressions declining and engagement on stories plateauing in 2019. “Competition from TikTok is a big concern,” a presentation from the time says, adding a “conservative estimate” that 40 percent of the decline in time spent on Instagram was due to TikTok, and 23 percent in the US in particular.
Mosseri says he used to think of those platforms as more “lean-back experiences,” but that’s changed in recent years. TikTok is now “every bit as participatory as we are at this point” and as YouTube has leaned into Shorts, it’s “brought them closer to us.” Mosseri notes that TikTok now has a friends tab, which a TikTok executive testified earlier in trial only accounts for about 1 percent of the videos viewed on the app.
In a January Reel, Mosseri announced a new feed within Instagram of videos their friends have liked in an effort to make sure Instagram is not just “a lean-back experience, but a participatory one, a social one.” It underscores how Instagram still sees connecting friends as a core experience on its app. Mosseri testifies he was distracted watching the video because “I’m mostly focusing on the one comment that said ‘definitely not a good idea.’”
In this 2024 video played in court, Mosseri explains that Instagram doesn’t plan to go after the long-form video market because it’s not as conducive to sharing and interacting with friends. Mosseri testifies that even today, “I still think friends are an important part of the experience.”
In an email thread from 2018, Mosseri checked in with Zuckerberg from paternity leave to try to communicate concerns the Instagram co-founders Kevin Systrom and Mike Krieger had with strategy changes for the app. Mosseri wrote that after catching up with Systrom, it was “hard for me to get a read on what’s going on as the relationship is strained.” He told Zuckerberg, “The core tension seems to be twofold: (1) you believe slowing down Instagram will help more than some others do, and (2) your tolerance for handicapping Instagram is expectedly higher than the Instagram team’s.”
Zuckerberg told Mosseri in a 2018 email that even as Instagram grows to include more public entertainment posts, it “can never exclusively be for public figures or it will cease to be a social product.” Meta has been arguing that the social media market has changed so much that entertainment is a key focus of social apps including Instagram and TikTok, but the email suggests that at least at the time, Meta’s CEO felt that connecting with friends would always need to be remain a core use case.
The Verge’s Editor-in-Chief Nilay Patel gets a shoutout in court when the government plays a clip of Mosseri’s January 2021 podcast interview. In the clip, Mosseri talks about joining Instagram and making changes to the safety and integrity operations. Mosseri says on the stand that he indeed “vaguely remember[s] talking to Nilay.” Here’s part of the transcript from the clip they played in court:
When I joined Instagram, I wasn’t running it. I was the head of product. I had come from running News Feed at Facebook for a number of years. And I told everybody I was going to be a sponge, and I wasn’t going to push for any change for a couple months while I ramped up and tried to better understand Instagram, the product, the employee base, and the values.
But the one place where I almost immediately broke my promise was on safety and integrity. I was pretty interested in the details, having spent the last couple of years being responsible for fake news on Facebook and a bunch of other gnarly safety problems.
I found for the most part that [Instagram was] just running our own stuff, and our team was tiny. And so I made the team pivot and essentially [integrate] the technology and work with the engineers who worked on safety across the rest of the company. I actually lost a bunch of people because of that. Not because they disagreed that it was a better way to keep people safe on Instagram over the long run, but it just wasn’t why they signed up to be on the team. So it was pretty painful for six months on that front. And I lost some credibility with some of the people.
But the team decided to make it a standalone app because they wanted to replicate how within Twitter, replies are as prominent as the original posts — something that’s not typically the case on Instagram. The group decided it would be too confusing to users to squeeze in this different model. “That was a very contentious decision internally,” Mosseri testifies.
That’s how Meta viewed the app when it was evaluating launching a competitor that would eventually be called Threads. The FTC is trying to use Meta’s internal evaluations of Twitter to show that it doesn’t see the primary reason for going to Twitter as connecting with friends and family — and therefore, it’s arguing, in a different market from the one it says Facebook and Instagram monopolize.
Mosseri says the app finds the most success in blending entertainment with interacting with friends. That could look like commenting on a public post about a sporting event and interacting with a friend in the comments, he says. That’s important since Meta noted in documents around 2018 that people were sharing less in their feeds, and public content was increasing. The FTC is trying to point out that even if posting to the apps has declined, there’s still friends and family interaction happening.
The FTC is beginning its questioning of the Meta executive by fleshing out what users want out of Instagram. The testimony will help shape how the judge thinks about the market Meta competes in: a limited market in social media networking to keep up with friends and family, or a broader market including entertainment that encompasses apps like TikTok and YouTube.
Schultz began testifying about how Meta tracked the rise of mobile messaging apps. Mosseri is expected to take the stand tomorrow and we’ll go live again then.
Alex Schultz, who’s worked at Meta for years in growth and analytics, is now testifying. He clarifies during the FTC’s introductory questions that while there are multiple VPs of analytics, he is “the” VP of analytics. While I was across the courthouse covering Apple executive Eddy Cue’s testimony in the Google remedies case, WhatsApp chief Will Cathcart was testifying earlier today, followed by an FTC expert who surveyed users about their main motivations for using various social media apps.
The judge opted to watch video testimony slated for the day in his chambers, so we’re done for the day. We’ll go live again this week when the trial continues.
A 2014 chat log between Systrom and Deng seems to undercut Deng’s testimony that he doesn’t recall Meta scaling back growth resources for Instagram. Deng says he doesn’t have enough context to confirm what he and Systrom were discussing, but described the chat as a “knee-jerk reaction” to an email they mentioned at the time. “Am I reading correctly we now have less growth support, not more?” Systrom asked. “This isn’t great for us,” Deng wrote at the time.
Deng, who moved to Instagram in 2013 until 2015 after working on Facebook Messenger, is challenging Instagram co-founder Kevin Systrom’s testimony that the app could have reached the same success without Meta and that the company deprived it of resources. Deng says Meta helped Instagram with speeding up high quality hiring, and sharing infrastructure and growth team staff. Still, Deng left Instagram several years before Systrom departed the company.
Deng, who led product for Facebook’s messenger product in the early 2010s, says he was not worried about WhatsApp growing into a big rival in the US. Since many people in the US had iPhones where they could send mobile messages including photos through iMessage, he says, “people just expected more here than just text messaging,” which was the focus of the simple WhatsApp service. “There’s nothing about what they did that signaled they remotely wanted to get into more expressive messaging.” he says.
Former product executive Peter Deng warned colleagues about the existential threat of mobile messaging apps moving into Facebook’s core space. In an October 2012 email, he called messaging rivals “the biggest threat to our product that I’ve ever seen in my 5 years here at Facebook; it’s bigger than G+, and we’re all terrified,” he wrote, referring to Google’s now-defunct social media competitor. “These guys actually have a credible strategy: start with the most intimate social graph (i.e. The ones you message on mobile), and build from there.” Deng testifies he was referring to the three mobile apps that had started adding such features, and not the one Facebook ultimately acquired: WhatsApp.
During its Search antitrust trial yesterday, a DOJ attorney produced a document showing that “80 billion of 160 billion ‘tokens’ — snippets of content — after filtering out the material that publishers had opted out of allowing Google to use for training its AI,” according to Bloomberg.
But that opt-out only applies to DeepMind models, Bloomberg reports — when asked if “the search org has the ability to train on the data that publishers had opted out of training,” DeepMind VP Eli Collins replied, “Correct — for use in search.”
Former TikTok director of UX research Eric Morrison testifies in a short video deposition that as of 2022, unlike Facebook and Instagram, TikTok “was not necessarily serving that need to connect to people that you already know.” This is the need that the FTC says Facebook and Instagram uniquely fill, alongside the smaller apps Snapchat and MeWe.
Hegeman concedes that even with TikTok becoming a more significant competitor in the past two years, Facebook’s user base and the time users spend on it have continued to grow.
Hegeman says that the (not publicly disclosed) number of users who opted out of off-app tracking through Apple’s App Tracking Transparency policy mostly reflects Apple’s scare tactics in framing the question to users, rather than whether users actually prefer not to share their data with Meta. He adds that Apple frames the ask very differently when asking users about similar opt-ins for its own products. “I think it’s a clear example of them trying to leverage their position controlling the iOS operating system to advantage their position in the market,” he says.
Sometime after 2018, Meta realized that focusing on surfacing friends and family content wasn’t helping it as much as it had hoped. Competitors like TikTok were taking over a lot of time users would spend online, and Hegeman says Meta found it to be a better strategy to broaden the focus of the Facebook app to include investments in video and other kinds of content.
In 2021, Meta found that by reducing the relative amount of ads some groups saw by 80 percent, it only saw about a 3 percent increase of a usage metric. This shows ads aren’t a major cost for consumers, Hegeman says, because if a company like Apple lowered the price of its iPhone by 80 percent, it would likely see much more than a 3 percent increase in sales.
In response to regulations in the EU, Meta began offering an ad-free version of its products there for 6 Euros a month. But that offering hasn’t caught on, Hegeman says — just about 0.007 percent of users opted to pay for the service.
Meta found when it tested a new system to customize how many ads it shows based on how much a user likes or dislikes them, users didn’t seem to know the difference. The time they spent on the platforms and engaged on it didn’t change much. “This change had a minimal impact on people’s experience and was not very noticeable,” Hegeman says.
The FTC is asking Meta about Apple’s 2021 App Tracking Transparency policy that let users decide whether to let developers track their activity off-app to help serve more persoanlized ads. Meta warned investors in 2022 that it would result in a $10 billion revenue hit to its business that year. That’s presumably because when users are given an option to give Facebook and Instagram less data, at least a significant chunk of them take it. We don’t know exactly how many, though, since the judge sealed the courtroom to discuss internal metrics like how many people opted into the tracking.
That’s theme of the FTC’s questioning of Meta’s CRO. The FTC’s Stephen Pearson is asking about what Meta says it collects in its privacy policy, and points out that if Instagram were independent, it would have its own policy. Meta uses this data to fuel personalized advertising, which makes money for the company. Pearson is also beginning to touch on ad load — or the relative amount of ads to organic posts users see in their feed — which the FTC has tried to show Meta can increase with relatively little risk of losing users.
John Hegeman, the top executive in charge of monetizing Facebook and Instagram, just took the stand. He previously led product management for the Facebook feed.
What users say they want and what they show they want through their actions can be two different things. Cobb illustrates this point with the example of chronological feeds. While users repeatedly report this as a feature they’d like, Cobb says every time the company has tested it, satisfaction with the app declines and users’ engagement changes.
But that dip soon recovered, Cobb testifies. He’s referencing the sweeping content moderation and fact-checking policy changes CEO Mark Zuckerberg announced in January just ahead of President Donald Trump’s inauguration, which answered a Republican wish-list.
Dips in how users feel about Meta’s brand are often correlated to media coverage — not necessarily actual changes to the product, Meta research executive Curtiss Cobb testifies on cross-examination. The FTC had tried to frame the fact that users don’t leave the apps in droves after reporting feeling worse about Meta’s brand shows they’re locked in due to Meta’s alleged monopoly. Meta is trying to complicate this picture, by showing that just because users feel worse about the brand after a specific media event doesn’t mean that its products are getting any worse — and that might be reason enough to stay.
Now that Judge Yvonne Gonzalez Rogers has issued an order preventing Apple from charging a commission on sales made outside the App Store, the company has confirmed that it will appeal. Here’s the company’s statement, sent by senior director of corporate communications, Olivia Dalton:
We strongly disagree with the decision. We will comply with the court’s order and we will appeal.
Chairman Jim Jordan (R-OH) removed a provision from a budget package that would have stripped antitrust enforcement authority from the consumer protection agency and transferred it over to the Justice Department’s Antitrust Division. The language appeared in an earlier version of the package and has long been on Republicans’ wishlist. President Donald Trump has fired the panel’s two Democratic minority commissioners shortly before the agency went to court over its lawsuit against Meta’s alleged social media monopoly.
