Lauren Feiner

Judge Boasberg asks Hemphill to “square” Meta’s claim that user interest in friends and family posts are declining with Hemphill’s claim that Meta’s apps are degrading in quality because they’re showing users less of this content. Hemphill says there’s evidence users really do want to see posts from their friends and they show “frustration that they don’t get it.” So if Boasberg finds users do want this kind of content and Meta isn’t serving it, that can show it’s degraded the quality of its apps.

New York University professor Scott Hemphill takes the stand, fleshing out the economic argument behind the government’s market definition, and how Meta has — in his expert opinion — harmed competition and consumers with its monopoly power.

In a 2022 document, Meta found that Instagram was experiencing “downward pressure” from TikTok “on interest content consumption.” But, it added, “that same pressure is less evident on consumption of friend content, which begs the question: Are we putting enough focus/energy into defending/evolving key jobs we continue to be hired for?”

The FTC makes the point that because Instagram and Facebook have already added most of the roughly 250 million potential eligible users in the US, its user growth rate looks slower, even though it’s still adding users overall. But Schultz says this is exactly why Meta competes with apps like YouTube and TikTok for users to spend more time on their own apps — doubling down on Meta’s argument in the case. “Time is the thing people are all competing for because people are multi-homing, they’re using every app.”

Schultz says he “quibble[s]” with the idea that Instagram had good engagement pre-acquisition. “I didn’t think it had the highest engagement when I got to see the numbers when it was inside,” he says.

The FTC’s theory that Meta’s power is only constrained by these two apps is “ridiculous,” Schultz testifies, concluding his examination by Meta’s attorney.

Creating a social graph of users’ friends, likes, and interests isn’t as meaningful for social apps as it used to be, Schultz says. That’s thanks to advances in AI, which has made it easier to predict and serve content to users they might not have even known they’d like. The FTC says Meta’s network effects and extensive mapping of users’ connections makes it difficult for upstarts to dislodge it.

Had Meta never bought the app, Schultz says Instagram would have continued to copy Twitter. “I think Twitter had a less effective growth team than us,” he says.

After a brief dip in Instagram’s growth rate in 2018 due to changes in how Facebook promoted it, the app’s growth rate recovered and continued to go up and to the right, a chart shown in court shows. Schultz says the results mean the change wasn’t as dire as Systrom might have believed.

For all the tension that came from Facebook’s decision to promote Instagram less from its app, it wasn’t all that consequential for Instagram’s growth in the end, Schultz testifies. Instagram’s growth rate dipped 14 percent, but it was still growing users overall. Ultimately, Schultz says, it was a “blip.”