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After Hemphill describes how Meta’s increased rate of showing users ads is negative for consumers, Boasberg asks him to square that notion with his claim that WhatsApp and Instagram would have had to make money eventually, whether or not they were part of Meta. Hemphill says that even if both served ads to users as independent apps, it might have been to a lesser degree than they do now, or they might have offered users other benefits in exchange.

This is the message Boasberg says he’s received throughout trial, and he’s trying to square it with Hemphill’s assertion that users still want to see posts from their friends, even as they spend more and more time watching videos from people they’re not connected with. “Shouldn’t we assume that’s what they want, and therefore, what you’re terming underinvestment is just a shift that follows where users want to be?” Boasberg asks. Hemphill says Meta, not its users, determine the makeup of posts they see in their feeds, and even if friends content is declining as a percentage of the app, it’s still very large in absolute terms. And even if Meta makes less money from ads in Reels, a lot of content from people users don’t know now shows up in their feeds, too.

Boasberg pushes back on Hemphill’s framing of the Instagram acquisition as an effort to maintain a competitive moat. Hemphill references a 2012 email where Zuckerberg discussed the importance of keeping Instagram running after buying it to prevent another app from filling the vacuum. But Boasberg says this seems contrary to what actually played out: Meta invested in the app and it experienced massive growth. “This competitive moat seems a minor factor in its decision making,” he says. Hemphill says the moat was Meta’s intent at the time, even if the app ultimately exceeded expectations.

Boasberg brings up Meta CMO Alex Schultz’s testimony of “explosive growth” for Instagram and says that it would be “pretty hard” for Instagram to grow much larger than it already has in the US, since it already has most eligible US users on its platform. Hemphill says there’s other measures on which this whole slice of the social media market might have been better for consumers if Meta never bought Instagram, like consumer welfare and the quality of apps.

Meta paid a $6.5 billion to $10.9 billion premium on its acquisition of WhatsApp, depending on which valuation you look at, Hemphill says. This can’t be explained away with standard business reasons for paying more for an acquisition, like synergies that would be particularly beneficial, because he says there’s no evidence Meta analyzed this. Instead, he says, the premium “reinforces the conclusion that the project was an anticompetitive project.”

And the most likely way it would have done this without Meta would be building its own personal social networking service that competed with Facebook and Instagram, Hemphill says, since this is how messaging apps in other countries monetized. Boasberg brought up testimony we’ve heard that WhatsApp’s founders were resistant to this kind of pivot, but Hemphill says that they still had investors and employees to answer to who would eventually want a payout. Plus, he says, Meta eventually was able to convince them to monetize the app somehow.

Hemphill compares Meta’s claims that it’s power is constrained by newer apps like TikTok to Microsoft’s claims of being constrained by the PalmPilot and AOL at the time it was found to be an illegal monopolist. He says Microsoft sustained its dominance even in the face of competition “more or less on the margins.” He also says that what Meta calls “headwinds” from TikTok didn’t stop the company from beating its own revenue projection in 2024, which already forecast 78 percent growth from 2020.

Meta has argued that users’ reports about how much they think the company cares about them is mostly a reflection of media reporting, rather than actual changes to Meta’s products. Boasberg asks Hemphill whether changes in user sentiment really are about the actual products or perceptions of them, and whether that matters. Hemphill says that even in the case of Cambridge Analytica, where reporting came out long after the privacy incident at the heart of the story, “it’s not that the Facebook business in fact changed with the revelation, but what did happen was a sort of scales falling from your eyes effect, where users became aware of this possibility.” He adds that Meta pays attention to user sentiment “in a way that is not just managing their reputation.”

Meta shows fewer ads to what they call “needy users” whose engagement drops more significantly when they’re shown more ads. Hemphill calls this a “discount” for those users — and a sign of price discrimination by an illegal monopolist.

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.”

Schultz acknowledges there was tension between his central growth team and Systrom in the mid-2010s, which we heard about from Systrom’s perspective a few weeks ago. While Systrom described a situation where Meta pulled back growth staff for Instagram, Schultz says Systrom was uninterested in the tweaks his team suggested to grow the app. It was only after the growth team pulled back from Instagram that Systrom realized their value and wanted them back, Schultz recalls.

The FTC is expected to wrap up its case this week, meaning Meta will then get the chance to call its own witnesses for its case-in-chief. Meta CMO Alex Schultz is back on the stand testifying about the staffing and expertise the company gave Instagram after its 2012 acquisition. He says that for the first three to four years post-deal, Meta gave Instagram co-founder Kevin Systrom pretty much “everything he wanted.”

Schultz says when he took on the task of leading the company’s brand reputation, it was like “catching a falling knife.” But things have since gotten better. He says relative brand sentiment for Meta falls somewhere in the middle of other companies it measures against, putting it pretty close to the bank that in 2020 settled a criminal investigation with the US government over alleged fraud.

When Instagram ran a test showing one group more friends and family-focused content, it reported in 2016 that it found a 7 percent increase in time spent on the platform and a 7 percentage point increase in user retention. Turning to cross-examination, Meta’s attorney points out a lot has changed in the market since that period.

Meta CMO Alex Schultz is back on the stand after Mosseri finished testifying. In a 2014 email shortly after Facebook announced its WhatsApp acquisition, Schultz responded to an executive concerned that the Messenger team was “demotivated by the announcement.” Schultz said he was “more motivated than ever to still be working on messenger.” The first explanation he listed: “Have to keep things honest so the deal doesn’t fall through and prove there is competition.”

The FTC revisits the Kardashain-popularized meme pushing back on Instagram’s design overhaul that it later walked back. It’s walking through a 2022 interview with The Verge where Mosseri explained the decision. He testifies that people always complain about change, and that connecting with friends remains an important reason users come to the app, but Instagram has to to adapt the form in which they facilitate that in order to survive.

“I never met a creator who didn’t think they deserved more reach than they were getting,” Mosseri says. But the reality is, he adds, there’s two times as many creators this year than last, so the field is getting more and more saturated. “Even though Instagram might benefit, there are winners and losers within the creator ecosystem.”

Mosseri takes the jab at TikTok after the FTC asks about the reliability of TikTok’s data evaluating how much its features are used. The FTC may be underscoring a TikTok executive’s earlier testimony that it’s “friends” feed only makes up a small percentage of videos viewed on the app. That goes toward the FTC’s argument that users don’t primarily go to TikTok to connect with friends, as they more often do with Instagram.

That’s how Mosseri describes Facebook’s decision to buy Instagram in 2012. He says that both companies “benefited greatly” — Instagram, from Facebook’s resources and experience, and Facebook, from the founders’ talent for building compelling products.

Mosseri found himself in the middle of the tension between the two companies, having moved to Instagram from Facebook. He understood some of the concerns the Instagram founders had about things like discontinuing some links from Facebook to Instagram, and similarly disagreed with certain changes from Facebook, but “also thought they were being made more of than they needed to be.”

Mosseri estimates this is the most Instagram has spent in a given year on creator incentives. Instagram sees creators as a good source of content after many rank-and-file users began posting fewer of their own updates.

That’s how Mosseri describes the state of things in late 2021, where a chart in a board presentation shows relatively flat growth in time spent on Instagram. If you were to look at Instagram’s growth here in isolation, he says, it would look like Instagram had some positive, modest growth. But comparing it to TikTok’s explosive rise tells a different story.

In a March 2020 update to Instagram staff, Mosseri gave a bleak overview of the challenges the company was facing. “The engagement trends, particularly in the US, have been concerning. Time spent has dropped, stories consumption and production have plateaued, Feed’s decline has continued, and time in Explore has been sliding since the summer of 2018,” he wrote, blaming the slide, in part on some of the company’s own mistakes “and competition from TikTok and Snapchat.”

The first time around, Instagram tried to build its short-form video concept on top of Stories, which he says was “not a sound foundation” for the product. “I think we could have and should have been more aggressive,” he says about building Reels and competing with TikTok.

Mosseri says Meta is always focused on competition, but TikTok represented the greatest he’s seen during his time at the company. After seeing engagement plateau in 2019, however, the company has since bounced back thanks to building out Reels and better AI-powered recommendations. “We’ve seen a lot of growth for the overall app, though the percentage of the app spent on friend content has gone down,” Mosseri testifies.

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:

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.