After years of moving fast and breaking things, governments around the world are waking up to the dangers of uncontrolled tech platforms and starting to think of ways to rein in those platforms. Sometimes, that means data privacy measures like the General Data Protection Regulation (GDPR) or more recent measures passed in the wake of Facebook’s Cambridge Analytica scandal. On the smaller side, it takes the form of specific ad restrictions, transparency measures, or anti-tracking protocols. With such a broad problem, nearly any solution is on the table. It’s still too early to say whether those measures will be focused on Facebook, Google, or the tech industry at large. At the same time, conservative lawmakers are eager to use accusations of bias as a way to influence moderation policy, making the specter of strong regulation all the more controversial. Whatever next steps Congress and the courts decide to take, you can track the latest updates here.
At launch, Systrom says the app’s growth was “exponential, unstoppable,” with 25,000 users registering in the first day. It was growing so quickly in the early days that, in his eyes, it didn’t even matter exactly how many active users were on the platform; he just had to keep up with the demand, he testifies.
We’re going all the way back to 2009, when Systrom and co-founder Mike Krieger were working on a location check-in app called Burbn, which they later pivoted into the photo-sharing app Instagram. Systrom says Instagram’s October 2010 launch occurred as the Apple App Store was making it easier for developers to get started, and advances in smartphone cameras, particularly with the iPhone 4, had significantly improved photo quality.
The FTC just called the former Instagram CEO as their next witness to kick off the sixth day of trial. He’s likely to be testifying all day about his experience selling to Meta and then working there for six years.
That’s because DMA rules let iPad owners access alternative app stores like AltStore Classic. That opens the door to iPadOS apps with just-in-time compilation (JIT) for modern hardware emulation and running things like Windows 11 on an M2 iPad Air, as YouTuber NTDev demonstrates in the video below. MacRumors has some details on how it works.
Meanwhile, the best I can do is JIT-less Windows XP on an M1 iPad Pro.
The court has wrapped for the day after it was briefly closed to play some sealed testimony from one of the video depositions. Instagram co-founder and former CEO Kevin Systrom is expected to testify for most, if not all, of the day tomorrow.
Amin Zoufonoun, a former Meta corporate development executive, testifies in a video deposition about “spirited debates” over whether mobile messaging could threaten Facebook’s flagship app, though he doesn’t specifically recall colleagues seeing it as a threat. He remembers colleagues wondering, for example, if messaging apps could “use that as a Trojan horse wedge to get into the social networking space.”
Botha says that, if he had suggested a $1 billion valuation for Instagram at the time, he probably wouldn’t have gotten support from his partners. It wasn’t clear it’d be worth that much, he says.
Botha recalls expressing to Instagram’s founders that if they wanted to get their “payday” from Meta, that’s their prerogative. But, he recalls saying, “if your ambition is to build an independent company, then you should partner with people like us.”
Botha says he was “giddy” to get the chance to invest in the app in 2012. He recalls it was less than a year old and already had millions of daily users. Sequoia didn’t get to invest as much as it wanted because so many other investors wanted a piece of the startup. He compares it to how he felt investing in YouTube: “This felt like one of these companies.”
We’re watching pre-recorded video testimony from Sequoia’s Roelof Botha, who spoke with attorneys in this case in January 2023 about his firm’s investment in Instagram in 2012, just before Meta acquired it. Botha describes the app’s rapid growth and resonance with users at the time, stating that Sequoia likely would have been able to help Instagram obtain the resources it needed to scale had Meta not intervened.
Arora says that WhatsApp’s founders were “very clear. They were not going to do it.” Meta’s attorney is getting him to pour cold water on the FTC expert’s testimony that WhatsApp would have likely ended up selling ads despite the founders’ wishes. “I would have said it’s not likely,” Arora testifies.
Arora says it was pretty customary to get such paperwork for an acquisition to ensure exclusive talks for a set period of time. After reviewing emails from the time, he testifies that Meta requested the agreement after they agreed to a deal price, but that WhatsApp did not sign it.
Neeraj Arora, who worked on an acquisition offer for WhatsApp at Google in the early 2010s before later joining the startup, is now testifying for the FTC. He’s discussing a 2010 Google presentation outlining the company’s strategic rationale for attempting to acquire the app. One of the goals listed was to “supercharge our mobile social initiatives.”
Meta’s attorney presents Rim with translated posts from his personal blog, originally written in Korean. In a November 2024 post about the Justice Department’s remedies proposals for Google’s search business, Rim wrote (according to a certified FTC translation), “admittedly, it can be difficult to imagine we are victims of Big Tech, who have made our lives so much easier.” Rim disagrees with the translation of “admittedly,” while Meta’s attorney assures him he has other certified translations.
A chart in Rim’s report comparing Instagram and WhatsApp’s engagement before and after their acquisitions is misleading, an attorney for Meta suggests in his cross-examination. The chart includes figures based on US user numbers in one color and global numbers in another. It appears that the apps had higher engagement prior to being acquired. The Meta attorney points out that the chart doesn’t distinguish between domestic usage and global usage, where engagement was lower.
That’s how Morgan Stanley proposed pitching the app to Facebook in a deck when the bank was seeking to be WhatsApp’s advisor for a sale, according to Rim. “WhatsApp could determine the social network winner on mobile,” the bank wrote. “Google’s resources combined with WhatsApp’s user base and traction could create the predominant social network on Mobile (surpassing Facebook).”
Boasberg asks Rim why he thinks WhatsApp would have eventually generated revenue despite the founders’ initial resistance to an ad model. One of the app’s investors, Jim Goetz, had earlier testified that it was “laughable” to suggest he could convince the founders to adopt ads.
While Rim agrees that WhatsApp’s investors couldn’t force the founders to do it, he says it was clear that a subscription model wouldn’t be sustainable. The fact that Goetz discussed an ad model or social network in investor memos suggests he thought it was a possible monetization path.
Rim says that, eventually, all startups need to monetize their product. “You cannot lose money forever,” he says, even as Meta CEO Mark Zuckerberg testified, WhatsApp’s founders resisted advertising and had limited ambitions. Rim says, “It’s common that founders change minds over time, especially if you are losing a lot of money, then you have to face reality.”
The FTC’s expert witness Jihoon Rim, who previously ran WhatsApp competitor Kakao, says both apps’ growth pre-acquisition were “exceptional.” On any given day, more than 60 percent of monthly users would be active, and both apps’ userbases grew very quickly. Rim says that WhatsApp’s lead investor had called it one of the highest-engagement apps they’d seen — higher, even, than Facebook.
It’s the fifth trial day in the antitrust case over its alleged social media monopoly. The big witness this week is Instagram co-founder Kevin Systrom, who’s set to testify tomorrow. The Federal Trade Commission just called its first expert witness, Jihoon Rim, an New York University professor who’s taught a course about founding a startup and worked as CEO of messaging app company Kakao.
If you’ve been watching our Meta antitrust coverage and are wondering what’s going on today: break time! We’ll be back in DC with Judge Boasberg — who has, you may recall, a lot happening right now — on Monday.
Meta and the FTC point to different parts of Google’s filings to international regulators to reinforce their views of the market. In an Australian filing where Google was attempting to avoid a social media probe, it stated that even though digital products can have overlapping audiences, “there are a number of use cases that only social media platforms such as Facebook can satisfy.” It earlier told European regulators that it competes with social networks for users.
The FTC presents Filner with a post-mortem document about YouTube’s 2014-2019 experiment with adding social features, such as in-app messaging. “We learned that taking a page from social apps and bluntly asking for contact access in the YouTube app would likely lead to user backlash and rejection,” the document reads. “Users who probably hadn’t batted an eyelash about providing their contacts to Snapchat didn’t see YouTube as a relevant app to share contacts with.”
Filner is currently a senior director of product management at YouTube. The FTC appears to be attempting to demonstrate that YouTube serves a distinct market from Meta’s apps and is not a direct competitor in the “personal social networking” market it has defined for this case.
Goetz says the $19 billion deal was reasonable because, like other companies that get acquired early on, “it looks like a high price, but with the benefit of time, it’s very clear that these young private companies had the potential to emerge into independent public companies.” The FTC has contended that Meta was willing to pay what it did because it was trying to get a potential competitor off the market.
Goetz is supporting Zuckerberg’s earlier characterization of the WhatsApp founders’ “disdain” for advertising and adding social features. He says that, before WhatsApp was acquired, Sequoia partners suggested launching a new app with social media features as a potential business model, but the founders wouldn’t have it. “We were quickly shot down and dismissed,” Goetz recalls. “They were very clear.”
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.
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.
