Meta chief Zuckerberg ‘considered spinning off Instagram over antitrust worries’

Meta chief Mark Zuckerberg once considered separating Instagram from its parent company due to worries about antitrust litigation, according to an email shown on the second say of a trial alleging the tech giant illegally monopolised the social media market.

In the 2018 email, Mr Zuckerberg wrote that he was beginning to wonder if “spinning Instagram out” would be the only way to accomplish important goals.

He also noted “there is a non-trivial chance” Meta could be forced to spin off Instagram and perhaps WhatsApp in five to 10 years anyway.

He wrote that while most companies resist break-ups, “the corporate history is that most companies actually perform better after they’ve been split up”.

Asked on Tuesday by lawyer Daniel Matheson, who is leading the antitrust case for the Federal Trade Commission, which incidence in corporate history he had in mind, Mr Zuckerberg responded: “I’m not sure what I had in mind then.”

The chief executive, who was the first witness, gave evidence for more than seven hours over two days in the trial that could force Meta to break off Instagram and WhatsApp, startups the group bought more than a decade ago which have since grown into social media powerhouses.

While questioning Mr Zuckerberg on Tuesday morning, Mr Matheson noted that he had referred to Instagram as a “rapidly growing, threatening network”. The lawyer also pointed out Mr Zuckerberg referring to trying to neutralise a competitor by buying the company.

But the CEO said while Mr Matheson was able to show documents in court that indicated his concern about Instagram’s growth, he also had many conversations about how excited his company was to acquire Instagram to make a better product.

Mr Zuckerberg also said Facebook was in the process of building a camera app for sharing on mobile phones, and he thought Instagram was better at that, “so I wanted to buy them”.

He also pushed back against Mr Matheson’s contention that the reason for buying the company was to neutralise a threat.

“I think that that mischaracterises what the email was,” Mr Zuckerberg said.

Mr Matheson repeatedly brought up emails — many more than a decade old — written by Mr Zuckerberg and his associates before and after the acquisition of Instagram.

While acknowledging the documents, Mr Zuckerberg has often sought to downplay the contents, saying he wrote them in the early stages of considering the acquisition and that what he wrote at the time did not capture the full scope of his interest in the company.

Mr Matheson also brought up a February 2012 message in which Mr Zuckerberg wrote to the former chief financial officer of Facebook that Instagram and Path, a social networking app, had already created meaningful networks that could be “very disruptive to us”.

Mr Zuckerberg told the hearing the message was written in the context of a broad discussion about whether they should buy companies to accelerate their own developments.

He also said that buying the company, taking it off the market and building their own version was “a reasonable thing to do”.

Later on Tuesday, Mark Hansen, a lawyer for Meta, began his questioning of Mr Zuckerberg. The lawyer, in his opening statements on Monday, emphasised that Meta’s services are free and that the company, far from holding a monopoly, actually has a lot of competition.

He made a point of bringing up those issues in just over an hour of questioning Mr Zuckerberg, with more expected on Wednesday.

“It’s very competitive,” Mr Zuckerberg said, noting that charging for using services like Facebook would probably drive users away because similar services are widely available elsewhere.

The trial is one of the first big tests of Donald Trump’s FTC’s ability to challenge Big Tech. The lawsuit was filed against Meta — then called Facebook — in 2020, during the president’s first term. It claims the company bought Instagram and WhatsApp to squash competition and establish an illegal monopoly in the social media market.

Facebook bought Instagram — which was a photo-sharing app with no ads — for a billion dollars in 2012.

Instagram was the first company Facebook bought and kept running as a separate app. Until then, Facebook had been known for smaller “acqui-hires” — a popular Silicon Valley deal in which a company purchases a startup as a way to hire its talented workers, then shuts the company down.

Two years later, it did it again with the messaging app WhatsApp, which it purchased for 22 billion billion.

WhatsApp and Instagram helped Facebook move its business from desktop computers to mobile devices, and to remain popular with younger generations as rivals like Snapchat (which it also tried to buy) and TikTok emerged.

However, the FTC has a narrow definition of Meta’s competitive market, excluding companies like TikTok, YouTube and Apple’s messaging service from being considered rivals to Instagram and WhatsApp.

US District Judge James Boasberg is presiding over the case. Late last year, he denied Meta’s request for a summary judgment and ruled that the case must go to trial.