Meta Chief Zuckerberg Testifies On Emails About Instagram, WhatsApp Deals

Mark Zuckerberg returned to federal court on Tuesday to answer questions about his acquisitions of Instagram and WhatsApp, which are at the center of a federal antitrust lawsuit that seeks to unwind the deals more than a decade after they were completed.

The Meta Platforms Inc. chief executive officer appeared in Washington for the second day and was questioned about a series of internal emails by lawyers from the US Federal Trade Commission, who allege that Meta’s acquisitions gave the company an illegal monopoly over parts of the social networking industry.

In testimony early Tuesday FTC lawyer Daniel Matheson presented Zuckerberg, who testified for more than three hours on Monday, with a 2012 email exchange between him and David Ebersman, then the chief financial officer of Facebook Inc., about the rationalization for acquiring apps such as Instagram.

When Ebersman asked whether that included the ability to “neutralize a competitor,” Zuckerberg replied affirmatively, among other reasons.

Instagram and another social networking app, Path, “are building networks that are competitive with our own,” Zuckerberg wrote in the exchange. “One way of looking at this is that what we are really buying is time. Even if some new competitor springs up, buying Instagram, Path, Foursquare etc. now will give us a year or more to integrate their dynamics before anyone can get close to their scale again.”

Under questioning by Matheson, Zuckerberg did not definitively acknowledge that the primary motivation for the Instagram deal was the company’s scale with users.

“I read this as talking about incorporating the functionality and staying ahead in terms of quality. But scale is one aspect of that and time is one aspect of that,” Zuckerberg said.

In his first day on the witness stand, Zuckerberg was questioned primarily about the company’s Instagram acquisition and its failed attempt to build a rival photo-sharing product back in 2011 and 2012. Lawyers for the FTC brought forward dozens of old emails and documents that showed how Facebook struggled to compete with Instagram’s rapid growth and ultimately acquired the startup instead.  

Emails showed that Zuckerberg was worried Instagram would grow big enough to copy some of Facebook’s social networking features. “If Instagram continues to kick a— on mobile or if Google buys them, then over the next few years they could easily add pieces of their service that copy what we’re doing now and if they have a growing number of people’s photos, then that’s a real issue for us,” he wrote to other executives in 2011.

On Tuesday, Zuckerberg was presented with other emails outlining his motives motives for both deals. 

“Messenger isn’t exactly beating WhatsApp, Instagram was growing so much faster than us that we had to buy them for $1 billion,” Zuckerberg wrote in a November 2012 email to then-Chief Operating Officer Sheryl Sandberg. “That’s not exactly killing it.”

When asked by Matheson whether he would have preferred to build an Instagram-like service in house, Zuckerberg responded, “I guess so, $1 billion is very expensive.” He acknowledged that even if Meta had built a rival product, “how it would have done is a matter of speculation.”

But he pushed back on the FTC’s explanation for why the company bought Instagram. “It’s not accurate to say that the only reason we were interested was the scale or growth rate, which I think that your question is implying.”

Zuckerberg also acknowledged blocking advertising on Facebook for messaging apps WeChat, Kakao and Line, which he said in a 2013 email are “trying to build social networks to replace us.”

In testimony Monday Zuckerberg tried to walk back that last statement, saying “It’s hard for me to characterize what their intent was.”

Matheson spent some of his time Tuesday morning setting up the idea that messaging services were becoming an increasingly competitive focus area for Facebook since several messaging services in Asia were also building social networking features. In an email to Facebook’s board in February 2013, Zuckerberg wrote that he was concerned that rivals like China’s Tencent Holdings Ltd. may expand outside of Asia, including by buying WhatsApp. 

“Mobile messaging is the next biggest consumer risk and opportunity,” he wrote. Tencent hasn’t “expanded outside Asia yet, but this is a big risk for us.”

The FTC’s argument hinges on the allegation that Meta has monopolized the market of social networks focused on friends and family sharing – a narrow market that the FTC believes includes Facebook, Instagram and Snap Inc.’s Snapchat. 

Meta’s lawyers, meanwhile, spent their opening statement Monday arguing that the company competes with a broad array of competitors, including ByteDance Ltd.’s TikTok, Google’s YouTube, and Apple Inc.’s iMessage. 

Zuckerberg reiterated that argument during his questioning, saying that helping people connect with friends and family “remains one of our priorities,” but that “we’ve always been a service that lets you discover and learn about what’s going on in the world.”