Meta CEO Mark Zuckerberg gave thought to spinning off Instagram as Big Tech antitrust scrutiny intensified, according to a 2018 memo that surfaced Tuesday as Zuckerberg took the stand to defend his company against claims that Meta illegally dominated social media.
“I wonder if we should consider the extreme step of spinning Instagram out as a separate company,” Zuckerberg said in the memo shown on the second day of a trial pitting Meta against President Trump’s Federal Trade Commission.
“As calls to break up the big tech companies grow, there is a non-trivial chance that we will be forced to spin out Instagram and perhaps Whatsapp in the next 5-10 years anyway,” Zuckerberg wrote in 2018 to other executives, according to Reuters.
The FTC is now asking for DC federal district court Judge James Boasberg as part of this new antitrust trial to force Meta (META) to sell off Instagram as well as its messaging service, WhatsApp.
Meta CEO Mark Zuckerberg departs the E. Barrett Prettyman United States court house on Monday in Washington, DC, after the Federal Trade Commission began an antitrust trial against Meta. (Photo by Andrew Harnik/Getty Images) ·Andrew Harnik via Getty Images
Instagram became a central topic for Zuckerberg as he spent his second day on the witness stand answering numerous questions from government prosecutors and being confronted with his past words and documents.
In a 2012 email, Zuckerberg told Facebook’s then chief financial officer, David Ebersman that a purchase of Instagram and other startups could be looked at as a way for Facebook to buy 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,” Zuckerberg wrote, according to an account of the testimony reported by Bloomberg.
Zuckerberg agreed under questioning by the FTC’s attorney that buying Instagram was intended to “neutralize a competitor,” but he added that the purchase was also meant to boost Facebook’s quality and functionality.
“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 testified, according to Bloomberg.
“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.”
Boxes of documents are seen inside a vehicle following the first day of a historic antitrust trial putting Meta against the FTC. (AP Photo/Nathan Howard) ·ASSOCIATED PRESS
Zuckerberg told the court that Facebook’s interest in Instagram was also tied to its struggle to build its own photo sharing app.
While the company was analyzing building versus buying a camera app, he said he thought Instagram was “better at that, so I thought it was better to buy them.”
“Building a new app is hard,” Zuckerberg testified, “and many more times than not when we have tried to build a new app it hasn’t gotten a lot of traction.”
One legal expert who conducted a past Meta inquiry for Congress said he thinks Zuckerberg’s testimony will help the FTC overcome its major hurdles in this case.
“To me there is no question that they viewed Instagram as a competitive threat,” said Slade Bond, former chief counsel to a House of Representatives antitrust subcommittee who helped lead a 2019 congressional inquiry into Meta and other Big Tech companies. He is now an attorney with Cuneo Gilbert & LaDuca.
Bond added that Zuckerberg testified that Facebook had to spend $1 billion to acquire the app because of its skyrocketing growth rate.
Those email impressions are “not subtle,” Bond said. “You have a young CEO in his late 20s, writing whatever he thinks to his senior leadership team at any given hour of the day, and now we’re supposed to believe it’s not true, which just doesn’t follow.”
Mark Hansen, a lawyer for Meta, departs following the first day of a historic antitrust trial at the Barrett Prettyman United States Court House in Washington. (AP Photo/Nathan Howard) ·ASSOCIATED PRESS
However, to win its case the FTC must prove that at the time of the Instagram and WhatsApp acquisitions Facebook operated in the “personal social networking” market, a subset of the broader social media market.
And that has its challenges in markets where there’s no discrete price for services, according to Bond. “On the question of product market definition, this is just tough,” Bond said.
He explained that in order to prove that Facebook had a monopoly, the FTC will need to show that people use Facebook and Instagram as a specific kind of social media to connect with friends and family.
Meta has argued that the FTC misidentified the market in which Facebook, Instagram, and WhatsApp compete because it left out TikTok, YouTube, X, and LinkedIn. Its lawyers have also noted that the FTC approved the Instagram and WhatsApp purchases more than a decade ago.
“The evidence at trial will show what every 17-year-old in the world knows: Instagram, Facebook, and WhatsApp compete with Chinese-owned TikTok, YouTube, X, iMessage, and many others,” a spokesperson for Meta said.
A spin-off of Instagram would deal a major blow to Meta’s bottom line. The app drove $32 billion in US ad revenue for Meta in 2024, representing 48.4% of its total ad revenue, according to Emarketer.
Judge Boasberg allotted roughly two months for both parties to present their cases, potentially stretching the proceedings into July 2025.
Alexis Keenan is a legal reporter for Yahoo Finance. Follow Alexis on X @alexiskweed.
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