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.
Sandberg is echoing something we heard from Zuckerberg, her former boss, over the past few days. These execs argue that consumers seeing more ads in Meta’s apps doesn’t mean the experience is getting worse. Sandberg says ads in features like stories are not very intrusive, and Meta can tell users are still having a good experience based on whether they stop and engage with the ads.
She’s being questioned by Meta’s attorney now, and we’re hearing about her experience working on Google’s advertising business in the early 2000s.
The then-COO had told Zuckerberg in 2012 she thought they were paying too much to acquire Instagram. In retrospect, she testifies, “I was wrong. Like, very wrong.” No one today would say they paid too much for Instagram, she adds, before leaving the stand for the day. We expect she’ll continue her testimony tomorrow.
Sandberg says that network effects — the idea that having more connected users on a platform can make it more valuable — have not done much to help it outcompete rivals in recent years. She points to the popularity of TikTok, which serves content largely from people you already know, and says that “the network effect of having a friends and family graph was much less important over time.”