Meta's Zuckerberg eyed Instagram spinoff amid antitrust scrutiny

Highlights:

• Document shows Zuckerberg contemplated Big Tech crackdown
• FTC is seeking to unwind Meta's acquisitions of Instagram and WhatsApp
• Meta denies holding social media monopoly, cites competition from TikTok, YouTube

Meta CEO Mark Zuckerberg considered spinning off popular photo-sharing app Instagram in 2018 over concerns about the growing risk of antitrust scrutiny, according to a document shown at a trial in Washington on Tuesday.

The document was shown during Zuckerberg's second day of testimony at the high-stakes trial, in which the US Federal Trade Commission is seeking to unwind Meta's acquisitions of prized assets Instagram and WhatsApp.

"I wonder if we should consider the extreme step of spinning Instagram out as a separate company," Zuckerberg said in the memo. At the time, the company was mulling plans to reorganize the social media company and link its apps together more closely.

Zuckerberg pushed back in the memo, saying consolidation was likely to yield "strong business growth" but cautioning that it also could erode the value of flagship app Facebook's social network, with scant promise that the company would get to keep its full "family of apps" in the end.

Meta ultimately did not spin off Instagram, instead proceeding with the plan to integrate its apps the following year. But the fact that Zuckerberg even considered the idea is a stunning sign of how seriously he took the threat of precisely the type of antitrust trial proceeding now.

"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," he wrote then, noting the possibility that the "next Democratic president" could take action to break up tech companies.

"This is one more factor that we should consider since even if we wanted to keep those apps together we may not be able to," he said.

The FTC ultimately sued Meta in 2020, during President Donald Trump's first term. Trump's antitrust enforcers sued Alphabet's Google the same year, accusing it of monopolizing search.

Zuckerberg also downplayed the impact of a spinoff on the company's fortunes at the time in his memo, although Meta has argued publicly since then that attempts to break it up would be damaging.

"While most companies resist break ups, the corporate history is that most companies actually perform better after they've been split up. The synergies are usually less than people think and the strategy tax is usually greater than people think," he wrote.

'INSTAGRAM WAS BETTER'

Zuckerberg's testimony comes as Meta is defending itself years after the release of other damning statements plucked from Facebook's own documents, like a 2008 email in which he said "it is better to buy than compete."

The FTC accuses Meta of holding a monopoly on platforms used to share content with friends and family, where its main competitors in the United States are Snap's Snapchat and MeWe, a tiny privacy-focused social media app launched in 2016.

Platforms where users broadcast content to strangers based on shared interests, such as X, TikTok, YouTube and Reddit are not interchangeable, the FTC argues.

The case is widely seen as a test of the new Trump administration's promises to take on Big Tech companies.

Zuckerberg testified earlier in the day that Meta bought Instagram because it had a "better" camera than the one his company was trying to build at the time.

The acknowledgement likewise appeared to support allegations by the FTC that Meta had used a "buy or bury" strategy to snap up potential rivals, keep smaller competitors at bay and maintain an illegal monopoly.

Asked by an attorney for the FTC whether he thought fast-growing Instagram could be destructive to Meta, then known as Facebook, Zuckerberg said he believed Instagram had a better camera than the one his company was building.

"We were doing a build vs. buy analysis" while in the process of building a camera app, Zuckerberg said. "I thought that Instagram was better at that, so I thought it was better to buy them."

The company argues that his past intentions are irrelevant because the FTC has defined the social media market inaccurately and failed to account for stiff competition Meta has faced from ByteDance's TikTok, Alphabet's YouTube and Apple's messaging app.

Zuckerberg also acknowledged that many of the company's attempts at building its own apps had failed.

"Building a new app is hard and many more times than not when we have tried to build a new app, it hasn't gotten a lot of traction," Zuckerberg told the court.

"We probably tried building dozens of apps over the history of the company and the majority of them don't go anywhere," he said.