More from FTC v. Meta: the antitrust battle over Instagram and WhatsApp
As an aside to a question about European regulations, Zuckerberg says that “it seems no matter what we do, the European Union seems to find we’re not following their rules.”
The company has been hammered by legislators and parents for how it sucks users into its services, but Zuckerberg says Meta focuses on creating valuable experiences, rather than making sure users stay engaged for as long as possible.
“I don’t want the team to just say, ‘oh this variant of the algorithm, people spend 20 seconds more in, so we’ll ship this,’” he says.
FTC attorney Daniel Matheson just passed Zuckerberg as a witness. Zuckerberg has been on the stand for roughly eight hours so far between today and yesterday. Now it’s Meta’s lead attorney Mark Hansen’s turn to question the CEO.
But he’s not giving them much to work with. The government wants to show that Meta dominates a distinct market of social apps for connecting with family and friends that only includes Snapchat and MeWe, a crucial element of proving its case.
Zuckerberg says that apps like TikTok might not explicitly market themselves that way, but “they’ve certainly taken steps” to promote friend connections by doing things like prompting users to import contacts.
He seems resistant to the idea that the professional social network is all that different from his own offerings nowadays. The FTC argues that the market Meta dominates is primarily about sharing content with family and friends, which would exclude services like LinkedIn and Nextdoor that market themselves for more specialized functions. According to Zuckerberg, “all of these are quite a bit more competitive” with Meta’s apps.
In October 2013, Zuckerberg wrote to his executive team that they should be prepared for news that he offered $6 billion to acquire Snapchat — a project internally called “Sasquatch.” That price tag never leaked, though his willingness to pay $3 billion for the company that year was widely covered at the time.
“I delivered the offer to Evan [Spiegel, Snap’s CEO] and he seemed to take it well,” Zuckerberg wrote in the email shown in court. He then wrote that Spiegel called him back five hours later to decline. “He says the offer is what he wants but he just wants to build the company on his own.”
Zuckerberg revealed this after the FTC attorney prodded him about whether people come to Facebook or Instagram just to look at ads. “You’ve never chosen to offer a feed of just ads,” the FTC’s Daniel Matheson says. “I think we’ve discussed it at one point,” Zuckerberg responds.
During yesterday’s testimony, we were shown internal emails from 2022 in which Zuckerberg discussed how the company could make friending on Facebook “a part of mainstream popular culture again.” His “one potentially crazy idea” was to consider “wiping everyone’s graphs and having them start again.” He suggested doing this potentially once a year.
More recently, Zuckerberg has publicly said that his goal is to bring back “OG Facebook,“ and Meta recently introduced a tab in the app where you can only see posts from friends.
While the FTC has tried to frame Meta stuffing its apps with ads as a consumer harm, Zuckerberg contends that the company’s users enjoy them. Over time, he says, people tell the company that the quality of ads “has basically approached the quality of the organic content.”
With the rapid growth of Snapchat Stories, Zuckerberg told his team in 2014: “We need to take this new dynamic seriously -- both as a competitive risk and as a product opportunity to add functionality that many people clearly love and want to use daily.” Because of Stories, he wrote, “Snapchat is now more of a competitor for Instagram and News Feed than it ever was for messaging.”
The Meta CEO says that the way they were able to grow Instagram post-acquisition gave him confidence he could do the same for other apps, like Snapchat. In 2013, he told his team about an offer to buy the app that Snap CEO Evan Spiegel ultimately rejected.
“For what it’s worth, I think if we had bought them, we probably would have accelerated their growth,” Zuckerberg testifies. “But that’s obviously a speculation.”
The FTC is presenting documents from 2013 in which Zuckerberg and another executive, Javier Olivan, discussed messaging app competitors and what they’d need to do to keep up. Olivan wrote that he had spent “sleepless nights” worrying about WhatsApp’s growth and warns that “it might be now or never” to improve Meta’s services, given how fast these guys keep growing / the ambitions they are signaling.
In January 2013, Zuckerberg said he thought his team “should block WeChat, Kakao and Line ads. Those companies are trying to build social networks and replace us. The revenue is immaterial to us compared to any risk.” On the stand, he acknowledges that “we worried about them broadly competing with us” ahead of his purchase of WhatsApp.
Zuckerberg concedes that in a perfect world, he probably would have preferred Facebook’s in-house Instagram competitor to succeed so that he didn’t have to shell out for Instagram.
“$1 billion is very expensive,” he says.
We got a brief glance into some more casual conversation between Zuckerberg and his then-COO Sheryl Sandberg. “I want to learn settlers of catan too so we can play,” Sandberg messaged her boss in November 2012. “I can definitely teach you Settlers of Catan,” Zuckerberg replied. “It’s very easy to learn.”
The Meta CEO is testifying about a February 2012 exchange with then-CFO David Ebersman, who said one (potentially bad) reason to buy a company is to “neutralize a potential competitor.” Seeming to ignore Ebersman’s opinion, Zuckerberg said that was one of the reasons he’d actually consider buying Instagram.
On the stand, Zuckerberg says that when you buy a company, you’re obviously taking a competitor off the market, but he thinks Meta maximized Instagram’s value.
The courthouse feels a bit sleepy as we head into day two of what I’m expecting to include more testimony from Mark Zuckerberg. Yesterday, he was asked about Facebook’s earliest days and talked a little bit about the Instagram acquisition. I’m expecting more of today’s testimony to focus on Instagram and why he bought WhatsApp.
We’ll provide updates throughout the day and share any interesting internal documents shown in court.
The antitrust trial started with hours of Mark’s testimony, while Meta and the FTC squabbled over defining the market.
The government just posted slides from its opening statement. They give a good roadmap of who we’ll hear from in the coming weeks. The presentation also previews some of the internal Meta documents we’ll see and how the FTC thinks it can win its case.
[ftc.gov]
When the FTC called Mark Zuckerberg to testify as its first witness, people here at the courthouse were hoping for some fireworks.
Instead, the FTC spent most of the day taking Zuckerberg down memory lane, starting with the launch of Facebook in 2004 through its rocky shift to mobile devices around the 2012 IPO. I didn’t see much that was heavily redacted or presented as new evidence in the courtroom. Only towards the end of the day did the FTC begin asking Zuckerberg about the Instagram acquisition. WhatsApp wasn’t covered at all.
In a February 2012 message, Mark Zuckerberg floated the idea of acquiring Instagram but not doing much with it so that new competitors wouldn’t creep into the market. On the stand, Zuckerberg deflects this as early thinking and says Facebook ultimately didn’t take this route. The FTC’s attorney points out that this was only a couple of months before the acquisition. From Zuckerberg’s message at the time:
“By not killing their products we prevent everyone from hating us and we make sure we don’t immediately create a hole in the market for someone else to fill but all future development would go towards our core products.”
Zuckerberg is walking through his mindset in February 2012 when he was considering acquiring the rapidly growing photo app. He asked colleagues if a purchase might be worth it even if it costs $500 million. “Theoretically we could go build this technology, but I’m worried we’re so far behind,” he wrote. Zuckerberg testifies he was considering this move ahead of their IPO when, for the first time, the company would have money to consider buying some products.