Regulation Archive

Presser says the video app doesn’t offer this kind of service, reinforcing the FTC’s view that TikTok operates in a market distinct from the one it claims Meta monopolizes — which focuses on connecting users with friends and family, rather that surfacing content based on users’ interests. Presser’s testimony is significant for the FTC, in part because ByteDance’s submission to European regulators in 2020 uses the term “personal social networking” to define Facebook and Instagram, which Meta has tried to paint as a made-up label.

It’s now TikTok’s turn to explain why it does (or doesn’t) compete with Facebook and Instagram for a social network connecting friends and family. Adam Presser, who leads operations and trust and safety, is walking through a submission by TikTok’s owner ByteDance to the European Commission, where it distinguishes between social networking services like Meta’s apps and “online content creation and sharing services,” which are focused around sharing and consuming content based on interests.

Meta is trying to draw an analogy between Yahoo’s $1 billion acquisition of Tumblr in 2013 with Meta’s 2012 acquisition of Instagram for the same price. Tumblr wasn’t making a profit when it was acquired but had a large user base. A big difference, of course, is the trajectory of each startup. When Meta’s attorney asks if Tumblr’s subsequent sale to Automattic was “significantly less” than $10 million, Tucker says, “I saw a joke that it was near the price of a modest home in Silicon Valley.”

Eli Tucker is walking the court through the blogging platform, including its app store listing that describes it with the words, “Fandom, Art, Chaos.” Just like the FTC did with Pinterest, Strava, and Reddit, the government is trying to show Judge Boasberg that the way these other platforms are designed and used are more about connecting over interests than with friends — and therefore outside of the market Meta allegedly monopolizes.

Meta is pointing out on cross-examination that Apple has chosen to list its own messaging app in this category on the App Store, suggesting there may be more overlap with Meta’s services than the FTC would argue.

Shah testifies that would probably be “distracting” for users who just want to focus on their conversations with friends.

In a screenshot of an example group chat, “Momma Chloe” asks this — presumably because she doesn’t have most of the messengers’ numbers. The FTC is making the point that iMessage users don’t have profiles that automatically populate if a user doesn’t already have someone else’s info — making it different from the social apps Meta runs. It’s a bit of a painstaking line of questioning for anyone who already uses iMessage regularly, but it’s driving home the point but the app is distinct from a personal social networking app.

Ronak Shah, director of product management who oversees services like iMessage and Safari as well as user privacy and security, is now testifying remotely. We’ll likely hear more about the messaging space that WhatsApp competes in.

The company invested extra to make sure it’s infrastructure wouldn’t melt down if TikTok were suddenly to go dark in the US after the ban took effect. Meta feared that “the flood in traffic of all those users coming to Reels … could potentially overwhelm our data centers to the point that our site would go down,” Olivan testifies. The company was already aware that Reels usage is higher in India, for example, where TikTok is banned.

All social network apps have to do to figure out who their users are connected with is ask for permission to read the address book on their phones, Olivan says, which is something most do when users first join an app. This pushes back on the FTC’s theory about the importance of network effects to Meta’s dominance — meaning that the more users are on a platform, the more value it has to those users.

Rather than stifle Instagram, Olivan testifies that Meta wanted the app to thrive after it acquired it. In a 2012 email after the acquisition was announced, Olivan said the startup founders were “barely being able to keep the site up & running” because of the influx of sign-ups. He suggested helping the app with translations and analytics that would help it grow, using existing frameworks that Facebook had already used.

Olivan says “there was no signs of them morphing into anything else” besides a replacement for SMS messaging. Besides the founders’ distaste for social features, Olivan says that the way WhatsApp grew outside the US — through arbitrage of high international telecom SMS fees — didn’t exist in the US. He flatly testifies that Meta did not buy WhatsApp because it feared the app becoming a social network competitor.

Even though the 2018 data scandal led users to view Facebook’s brand more negatively, Olivan concedes it had a relatively lower impact on users actually deactivating their accounts. The FTC seems to be positioning this as a measure of Meta’s alleged monopoly power, since the ability to raise prices without losing customers is a common indicator of such power.

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.