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For the past couple of days, Mark Zuckerberg has been inside a D.C. courtroom reviewing more than a decade of email communications about his company, Meta. This is the last place Zuckerberg wanted to be; he literally visited the White House to lobby to get out of it, and offered $1 billion to settle. The effort failed, and we now know plenty about the ruthless tactics that Zuckerberg used to build his sprawling social media empire.
And this exposure has already had a preventive effect: It’s why Meta’s control of public attention is likely to shrink over time, as competitors rise up that Meta won’t be able to buy. In a world without this aggressive antitrust enforcement, for example, Meta would have likely bought TikTok by now.
Zuckerberg’s testimony came in the Federal Trade Commission’s monopolization trial against Meta, the latest in a series of challenges to Big Tech. The Justice Department defeated Google in a monopolization case last year, and the remedy for Google illegally securing dominance in search is coming up next week.
This case involves the acquisitions of Instagram and WhatsApp in the early 2010s, both of which the FTC approved at the time. The government intends to show that the company, which was then called Facebook, expressly intended to purchase the two apps to stifle competition and monopolize personal social networking between friends and family. You may take me as a biased interlocutor on this matter, but any objective assessment of what has transpired over the past two days makes Zuckerberg’s intentions with Instagram and WhatsApp very clear.
In 2011, Zuckerberg sent several urgent messages about Instagram’s growth (“they appear to be reaching critical mass as a place you go to share photos”), and he fretted that the service could bolt on social networking and “copy what we’re doing now … I view this as a big strategic risk for us if we don’t completely own the photos space.” Facebook produced a clone called Facebook Camera, but it was slow to develop, something Zuckerberg complained about. In a separate email, Zuckerberg says Instagram’s growth is “really scary and why we might want to consider paying a lot of money for this.” When Zuckerberg’s chief financial officer warned that it would be a bad reason to buy Instagram to “neutralize a potential competitor,” Zuckerberg responded that this was in fact one of his rationales.
After making the $1 billion purchase in 2012, Meta shut down Facebook Camera, and it pursued an “explicit policy of not prioritizing Instagram’s growth,” so it wouldn’t pull users away from Facebook. But Zuckerberg knew better than to just switch off Instagram: “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,” he wrote. Another benefit: “Even if some new competitors spring up, if we incorporate the social mechanics they were using, these new products won’t get much traction since we’ll already have their mechanics deployed at scale.”
Meta’s control of public attention is likely to shrink over time, as competitors rise up that Meta won’t be able to buy.
Later, Zuckerberg’s attention turned to mobile messaging, which he described to his board as the greatest “consumer risk” for the company. “Messenger isn’t beating WhatsApp,” Zuckerberg worried. “Instagram was growing so much faster than us that we had to buy them for $1 billion.” He told his team to block ads from messaging competitors, because “those companies are trying to build social networks and replace us.” He keyed in on WhatsApp in particular, then the fastest-growing messaging service. The following year, Facebook bought WhatsApp for $19 billion.
This strategy has been described over the years as “buy or bury.” Facebook would first try to buy competitors—like it did with Snapchat, which turned down Facebook’s $6 billion offer in 2013. If that failed, it would simply clone them, like with Facebook Stories, which offered disappearing messages just like Snapchat. “Snapchat is now more of a competitor for Instagram and News Feed than it ever was for messaging,” Zuckerberg wrote in 2014. Indeed, as a personal social networking competitor, the FTC says Snap is practically all that’s left, and its reach is much smaller than Meta’s.
Once Facebook was in control of its competitor apps, it could effectively raise prices on customers by shoving more ads into Facebook and Instagram feeds. In 2018, Zuckerberg explicitly called this an “ad load tax.” That’s key to determining the benefits of monopolization. When asked about this on the stand, Zuckerberg tried to claim that people actually like ads.
Now, there’s a lot of discussion, as in every antitrust trial, about the relevant market. The FTC defines “personal social networking” as the ability to connect with friends and family, which is literally the tagline on screen when someone opens a Facebook account. Meta wants to expand the market definition to every type of user-generated website on the internet, including LinkedIn, Nextdoor, Reddit, and TikTok. Meta’s lawyers, which TAP alum and Lever News reporter Luke Goldstein estimates cost the company about $1 million in billing on just the first day of the trial, noted that Facebook and Instagram traffic went up during a TikTok outage in January.
This market definition is going to be part of the trial, and the FTC has a good case to make that Meta has always and continues to differentiate itself on the basis of connecting and sharing with friends and family in particular. But I think common sense can bring us to the simple conclusion, backed by an overwhelming amount of evidence, that Mark Zuckerberg bought Instagram and WhatsApp to prevent competition for his business. There’s just little doubt about this. And it’s interesting that, in the face of a legal case that began in 2019, the same attitude is not being taken toward TikTok, if Meta views it as a core competitor.
After all, TikTok is for sale right now. Federal law requires a divestiture of TikTok to a U.S. buyer. And despite a number of large and significant players in that bidding war, including Oracle, Microsoft, and even Amazon, Meta is not among them.
This would appear to conflict with the clear, detailed intentions of Zuckerberg toward other competitors. The only difference is that Meta is now on trial for exactly that kind of activity.
There’s an old phrase popularized by Gary Reback, the attorney who sued Microsoft in that monopolization case a quarter-century ago: The trial is the remedy. Because Microsoft was under threat for stifling competing products, it had to back off and allow sites on the World Wide Web to flourish. Because Facebook is under threat for buying or burying competitors, it cannot possibly participate in the TikTok auction, or take the same approach at squashing competition. This form of self-regulation is maybe not the optimal approach, but it’s better than nothing, and it’s triggered by aggressive antitrust enforcement. Facebook is being watched, and it cannot be as cavalier about its efforts to monopolize markets.
I don’t know how the trial is going to play out. There was no reason for Donald Trump to kill the trial now; if the FTC loses, he will never have needed to make a choice. There are two phases to monopolization cases like this, and even if Meta loses the first one, it will have another opportunity to convince Trump to be lenient on them before the remedy phase. The risk of politicized antitrust is still with us.
But the trial has already yielded something. Meta as a company is less likely to maintain its vise grip on social networking. The fact that the trial went forward at all shows bipartisan interest in enforcement that will not be going away. A spotlight can be a powerful thing that companies find difficult to escape.
The good news for Zuckerberg is that he’s already contemplated the consequences. In 2018, he mused openly about spinning off Instagram into a separate company, which would almost certainly be part of the government’s preferred remedy if they win the case. “While most companies resist break ups, the corporate history is that most companies actually perform better after they’ve been split up,” Zuckerberg wrote in that email. “[W]e may later regret not course correcting sooner in a way that may remain masked if the family of apps stays together.”
Indeed.
