Regulation

When Matheson points out that Facebook still prompts users to log in or sign up to connect with friends, family, and people they know, Alison cautions that “just because something is on our website doesn’t mean that it’s completely up to date,” since they’re working to update how they describe the brand. He adds during cross-examination that “people are coming to Facebook for several other things besides friends” and it’s in the middle of an evolutions of how to describe the app.

Matheson describes at a high level a publicly-redacted experiment from a 2021 presentation. Facebook found the experiment increased the amount of original content users shared to their feeds, but time spent on the app went down. Matheson says this would be bad for Facebook because if users see all their friends’ posts and don’t come back, it can’t serve them as many ads. Alison says that the number of times a day users opened the app also declined, as did its “meaningful social interaction” score — so another interpretation is that users would miss content they care even more about, like that from a support group.

That’s how Boasberg interprets the new feature that consolidates friends’ posts into one feed. “This arguably could also enable you on the feed to diminish further the number of friend posts because to the extent people say, ‘hey, I want to see more friend posts,’ the answer is, ‘just go to the tab, it’s all there,” Boasberg says. “And then if in fact the demand is really for unconnected content, then this sort of lets you have your cake and eat it too.” Alison says the decline in friend content is mostly due to users posting less to their feed, not Facebook’s own decisions.

Alison describes it as “a nice feature” for Facebook users who want it but no longer the “main character.”

That’s why Facebook created the friends tab to consolidate posts from users’ connections in one place. As Facebook now recommends more posts and videos from content creators and other accounts users aren’t connected with, Alison says that if a user really wanted to see every post from their friends in the regular feed, “you might have to scroll through 10,000 posts,” even if there’s only 10-20 new friend posts to see.

Facebook recently introduced a friends tab to try to recreate the feeling of scrolling your News Feed circa 2006. Alison says they think “there are some features from the very early days of Facebook and social networking that could become more interesting again” as apps including Facebook move toward public, algorithmically-recommended content. He describes it as an “experiment or a bet that we’re making to almost bring a little bit of nostalgia to Facebook as the core experience goes away from friends.”

In an interview published in October 2022, Alison told Wired’s Steven Levy that “Facebook is still at its core about friends and family.” But Alison testifies that if he were to redo the interview today, “I would acknowledge that there are a large number of people who are not using Facebook to connect with friends and family.” He adds that the world has changed so much that “we are seeing that not to be as true today as it felt two and half years ago when this interview took place.”

This was true even as the app built out its discovery engine, which powers algorithmic recommendations of content from users who are connected with one another, Alison testifies. The FTC is using Alison’s testimony to establish that in the past few years and through today, a sizable number of users still come to Facebook to connect with their friends, and the company recognizes this even as it expands into other use cases. Still, Alison says, Facebook now thinks about facilitating connections as inclusive of people users don’t know in real life, including content creators.

Not everyone who joins Facebook these days does so to find their friends on the service, Alison says. He testifies there’s a “growing” number of people who join the app with no friends, and don’t see any friend content on the app. Meta has argued that connecting with friends is an increasingly smaller portion of what users come to its apps for. The FTC says that as an absolute number, there’s still a sizable number of users who do want to connect with friends, and Facebook and Instagram are virtually the only games in town.

Alison downplays how much users care about connecting with their Facebook friends versus other potential connections, like content creators. “I have friends I haven’t seen in 30 years or I met once at a party that I don’t care about,” he says.

It’s not enough to look at what users say they want from Facebook, Alison says, you also have to look at what their actions tell you about what they want. Just because users say in surveys they want to see more friend content, doesn’t mean that’s how it plays out. “When people actually got more friend content on Facebook they visited Facebook less,” he testifies.

Alison is expected to be one of the FTC’s last major witnesses in its case-in-chief. The FTC’s lead attorney Dan Matheson is driving home the point that Meta knows that people want to see posts from their friends when they come to Facebook, by looking at a 2021 internal presentation where it found in a survey that “3 of the 4 top user pain points were related to friend content.”

During redirect, Hemphill testifies that some of the points Hansen made about his analysis weren’t relevant to his findings of Meta’s alleged anticompetitive behavior. He counter’s Hansen’s charge that he thinks he knows better than the business people at Meta. “They’ve got their expertise and I’ve got mine,” he says.

Hemphill clarifies that he did disclose to Meta during his deposition over a year ago that he and former Biden official Tim Wu had a “conversation” with the FTC in 2019 about investigating Meta, but the company never asked him for a copy of the presentation. He says he wasn’t compensated for it, and wasn’t retained by the FTC for another two and a half years — during which he also didn’t lobby the regulator to bring a case. He says that public reporting of Meta’s conduct “seemed like the kind of thing that we’d been worried about in our academic work,” but that he hadn’t formed a view at the time that its acquisitions of Instagram and WhatsApp were anticompetitive.

Back to friendlier-questioning from the FTC, Hemphill says that while ad quality might be improving, Meta is behaving like a monopolist in what it chooses to do with those quality gains. In a more competitive environment, Hemphill says, Meta would pass on those gains to consumers by letting them enjoy the same amount of ads, but at a higher quality. Instead, he says, Meta dials up the knob to show them more ads.

This is how Hansen closes what’s been a tense cross-examination of Hemphill. Meta has used the exam to try to discredit the FTC’s key economic expert, and Hansen reiterates that Hemphill had “preconceived” notions about the case, calling back to the 2019 “roadshow” he participated in to convince regulators to investigate Meta. Hemphill has been on the stand since Monday afternoon, and the FTC attorney Krisha Cerilli is back for redirect questioning.

This is what Hansen asks the FTC expert after showing a chart that shows younger cohorts spend a higher percentage of time on the platform engaging with friends than older cohorts, yet they get served fewer ads — seemingly contrary to Hemphill’s claim that Meta taxes users who enjoy friend sharing more. Hemphill says the point is “apples and oranges” and that the older cohort makes up 60 to 70 percent of the user base getting higher ad loads. That prompts Hansen to ask whether he thinks Meta discriminates against such a large portion of its users, and Hemphill says it’s “a standard understanding of price discrimination.”

Hemphill doesn’t cite any documents or testimony that directly say Meta engages in this kind of behavior by showing these users more ads. Hansen says. Hemphill responds that his conclusion comes from the evidence of price discrimination in how Meta chooses to serve ads to different users, recognizing which are more or less engaged with their services. But, he acknowledges, “I’m not aware of a single document that connects the dots in that exact way.”

Hansen accuses Hemphill of altering the axis on charts showing user sentiment about Meta, calling it “misleading to crop the axis to magnify changes that aren’t changes.” When Hemphill describes the sentiment metrics as in “clear decline,” Hansen shoots back, “there’s no decline. It’s flat. Flat as a pancake.”

If users don’t want to see an ad, they can scroll past it in “a second or less,” Meta’s Hansen says. Hemphill agrees that “not every ad is burdensome” and users can gain value from some of them, but on the whole they are a burdensome part of the social media experience for users. Hemphill adds that he hasn’t “made a study of scroll time, though I agree that scrolling past an ad does not take long.”

Hansen charges that Hemphill’s conclusions would mean Meta would need to pay consumers to use its services in order to make it any cheaper than it already is — free. Hemphill has testified that under a more competitive social media market, there would be a greater “surplus” for consumers. Hemphill says Meta wouldn’t necessarily have to pay users in cold hard cash. Alternatively, it could offer them some other kind of reward they’d consider valuable.

Meta’s lead attorney Mark Hansen is continuing cross-examination of the FTC’s economic expert Scott Hemphill this morning. Hansen brings up this incident that Meta has repeatedly come back to at trial to show that TikTok users see Facebook and Instagram as reasonable alternatives, even though the government says they don’t compete for the same market Meta dominates. He says Facebook saw 20 percent of diverted usage from TikTok during its January 2025 outage, and Instagram, 17 percent.

During cross-examination, we’ve been looking at a 2019 deck the former Biden official, Facebook co-founder, and the FTC’s now-expert Scott Hemphill pitched to regulators, describing why they should investigate the company on antitrust grounds, based on public reporting and data. Meta attorney Mark Hansen says the FTC nor Hemphill produced the slides to them, so it’s not clear where they came from, and when they change slides, we can see they’re from a photo of a phone, where someone’s finger is visible.

Presented with a side-by-side screenshot of the three short-form video products on the same Saturday Night Live video, Hemphill takes a long pause to identify the apps before he’s saying he’s not sure which is which.

Meta’s lead attorney Mark Hansen is using cross-examination to attack Hemphill’s credibility. Hansen calls him the “very definition” of a witness with preconceived notions about Meta’s liability and brings up what a press report called a “roadshow” he embarked on in 2019 with former Biden administration official Tim Wu and Facebook co-founder Chris Hughes to encourage state and federal enforcers to look into Meta’s potentially anticompetitive behavior. Hansen charges that Hemphill hasn’t adequately disclosed this activity, which the Meta attorney characterizes as advocacy for a cause. Hemphill says he wasn’t advocating that they bring a case, but to probe and find out if a valid case existed.

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.

The FTC’s economic expert Scott Hemphill is back on the stand testifying about how Meta’s alleged monopoly power allows it to offer different prices to different users and across its services. For example, Meta didn’t show ads on Reels for a while, but it did show ads in other parts of the Instagram app. Hemphill compares this to what sounds like the antitrust case against Whole Foods — saying that a supermarket specializing in premium, natural foods might have high margins on its organic mangos, but low margins in areas on which it competes with many other stores, like pantry staples. He says this is similar to Meta lowering prices on the product where it competes with other apps (short-form videos) but not on the one where it dominates the market (friends and family sharing on Feed and Stories).

The judge is using Hemphill’s testimony to work through some remaining questions he has in how to think about reaching a verdict in this case. It’s too early to say what this means for his thinking, but his questions indicate that some of Meta’s arguments are at least spinning his wheels. He asks, for example, if users’ feeds are increasingly made up of posts from accounts users aren’t connected to (i.e. algorithmically-recommended influencer posts), then can time spent on the Instagram feed or stories really be used as a proxy for users’ wanting to see more posts from their friends?