Lauren Feiner

Koum forwarded Goetz a message he got from Zuckerberg in 2013, asking if he’d consider selling for a higher price. “Clear to us that you could get tencent, facebook and google into a bidding war (with microsoft and yahoo trailing). Suggest you avoid the lunch and continue with your craftiness on any reply,” Goetz counseled. He testifies that he wanted Koum to recognize that they had lots of options and could fetch a higher price by playing bidders off each other.

That’s what WhatsApp founder Jan Koum told his investor, Jim Goetz, in a 2012 email. Koum referred to it as a “rumor” Zuckerberg heard, and that he worried Tencent would use the messaging app to compete with Facebook outside of China. “I told him I’ll let him know if we ever do get an offer we would ever consider,” Koum wrote about his interaction with Zuckerberg. “That made him feel better.”

A 2013 Sequoia internal memo notes that, “Multiple companies with a combined market cap in excess of $750B have reached out to WhatsApp at various points in time including Facebook, Microsoft, Yahoo, Google, Twitter, Tencent and NHN. Strategic interest is likely due to the company’s unique positioning as a large, global, independent and growing mobile-only asset.”

Judge Boasberg asks Goetz why he prefers that his portfolio companies go public. Goetz responded that it’s much better for his firm’s returns when promising companies go public, citing YouTube as an example of a company that was acquired and is now a highly valuable asset within the larger Google conglomerate. “They’re typically category leaders, they developed something that is unique, and in most cases, those companies compound 10x in the public markets,” he says.

In a 2012 document, Sequoia noted that Apple had entered the messaging market with the launch of iMessage but that “penetration has been modest and we know of no multi-platform ambitions in Cupertino.” On the other hand, the investor warned, “Facebook is the most significant threat given their user base, exceptional user engagement and willingness to support all the major mobile platforms.”

We’ve moved on to Sequoia Capital’s Jim Goetz, an investor in WhatsApp. The FTC is trying to show that WhatsApp had plenty of resources and investment to make a go of it on its own, or with another company, even if Meta hadn’t scooped it up.

Following the uproar over the 2018 data scandal revelation, Meta’s board considered giving users the option to opt out of advertising and pay for a subscription instead. The slide described the proposed product as a “paid monthly subscription offering that allows users to experience Facebook (and potentially our other apps) without ads.” The goal, it said, was to “address the meme: ‘if you are not paying for a service, you are the product.’”

A slide from a September 2020 Meta board meeting deck showed that Instagram revenue was “meaningfully lower” for the second half of the fiscal year than what the company had planned due to TikTok increasingly attracting users’ attention. That made Meta adjust its revenue estimates to be about $3 billion to $6 billion lower than previously anticipated.

It’s “not true” that Meta shows more ads to people who like sharing with friends and family, Sandberg says, disputing the government’s claim. Judge Boasberg summarizes the FTC’s argument that, because users who prefer sharing with friends are allegedly captive on Meta’s services, the company can increase the amount of ads they see without them leaving. He asks if Meta took those users’ preferences into account in serving ads. “I don’t believe so,” Sandberg says.