Zuckerberg Testifies on Instagram, WhatsApp Acquisitions and TikTok Threat

The ongoing antitrust lawsuit between the U.S. Federal Trade Commission (FTC) and Meta, formerly known as Facebook, recently saw a significant development with the company's CEO, Mark Zuckerberg, taking the stand to defend the company's acquisition of Instagram in 2012 and WhatsApp in 2014. The FTC alleges that these acquisitions were part of Meta's strategy to eliminate competition and monopolize the social media market. In his testimony, Zuckerberg referenced a 2012 email where he discussed the potential of the Instagram acquisition with a colleague, acknowledging the need to neutralize a competitive threat. He emphasized that the acquisition was intended to accelerate innovation and provide better services to users, not to reduce competition. Zuckerberg also highlighted that both Instagram and WhatsApp had clear strategic directions pre- and post-acquisition, and their integration into Meta's ecosystem enhanced user value. He noted that Meta faced intense competition from platforms like Twitter and Snapchat in its early years, and the acquisitions were necessary to maintain the company's competitive edge in a rapidly evolving market. Zuckerberg further defended the "acquire or bury" strategy mentioned in a 2008 internal email, stating that the goal was to bring promising applications into the company to foster growth and innovation. Meta contends that it is not a monopoly in the social media space, facing robust competition from TikTok, YouTube, and other platforms. The company argues that a competitive market drives technological advancement and enhances user experience. The litigation, which began on Monday, is expected to last for eight weeks and is being presided over by Judge James Boasberg. If the FTC prevails, Meta could be required to divest Instagram and WhatsApp, potentially reshaping the social media landscape. The case has garnered significant attention from industry experts who believe its outcome could set a precedent for future antitrust actions against large tech companies, influencing their acquisition strategies and market behaviors. During his testimony, Zuckerberg also touched on a failed acquisition attempt of Snapchat in 2013, which he believed would have accelerated Snapchat's growth if successful. At the time, Snapchat, just two years old, rejected Meta's $6 billion offer. The FTC has cited this failed acquisition as further evidence of Meta's anticompetitive practices, arguing that the company aimed to stifle competition through acquisitions rather than innovation. Zuckerberg responded by saying that Snapchat, both past and present, has been a significant competitor, and Meta's ability to improve technology could have helped Snapchat reach its full potential. Snapchat's spokesperson, Monique Berrey, countered that Meta's behavior often prevents small and emerging companies from growing, highlighting that Meta's imitation of Snapchat features was intended to restrict its development. The litigation extends beyond just social media competition. A chart presented in court by Meta's lawyer, Matt Hansen, demonstrated a surge in Instagram usage when TikTok experienced a server outage in January 2023, lasting about 14 hours. During this period, Instagram's hourly usage skyrocketed, illustrating the direct user flow from TikTok to Instagram. EMARKETER, a sister company of Business Insider, estimated that a TikTok ban in the U.S. could boost Meta's ad revenue by $2.46 billion to $3.38 billion, as users would likely turn to Meta's platforms for their content needs. In anticipation of potential opportunities, Meta is preparing to launch "Edits," a new video editing app, to compete directly with TikTok's CapCut. Zuckerberg continued his third day of testimony by highlighting the threat TikTok poses to Instagram and Facebook. He stated that TikTok has become the "biggest competitive threat" over the past few years, attracting many young users and leading to a decline in Meta's user growth and engagement. To counter this, Meta has invested heavily in developing its own short-form video features, such as Reels, to retain and attract users. Despite the challenges, Zuckerberg emphasized Meta's commitment to innovation and user-centric service improvements. Industries insiders are divided on their opinions. Some support Zuckerberg's defense, arguing that intense competition in the tech sector necessitates strategic acquisitions and continuous innovation. Others, however, believe that Meta's practices have indeed stifled competition and raised concerns about user privacy and data security. They argue that Meta needs to be more transparent and accountable. Meta, as one of the world's leading social media companies, owns Facebook, Instagram, and WhatsApp, among other applications. Despite facing numerous regulatory and legal challenges, the company has maintained its market dominance. The current antitrust case, if resolved in favor of the FTC, could lead to significant changes in Meta's business structure and potentially influence broader regulations in the tech industry. This case highlights the ongoing tension between large tech corporations and regulatory bodies, with far-reaching implications for how these companies operate and innovate in the future.