Meta antitrust trial kicks off in federal court

Everyone knew at the time that Facebook bought Instagram because it threatened Facebook's dominance, and hindsight shows that exactly that happened. There's a huge swath of people that dropped off FB and now use Insta, but Meta owns both. It was a great move but it was absolutely anti-competitive at the time.

https://www.cbsnews.com/sanfrancisco/news/report-facebook-hi...

Is that illegal? I don't understand! Every company that buys another company buys it because it adds something to their business. It's a ridiculous claim.

Whatsapp was purchased as a competition and therefore there’s a solid case for spitting the company along that line. Split off Instagram and things look even more competitive.

s/Meta/Instagram/

>it because it adds something to their business. It's a ridiculous claim.

"It" and "Something" are incredibly vague and meaningless. Their vacuousness is what allows you to not understand the illegal behavior.

[0] https://www.vice.com/en/article/slap-a-teacher-tiktok-challe...

https://archive.ph/ERLFo - Facebook paid Targeted Victory, a PR firm, to malign TikTok

https://archive.ph/wYuvL - A whistleblower’s power: Key takeaways from the Facebook Papers

https://archive.ph/rWDA4 - Mark Zuckerberg says TikTok is a threat to democracy, but didn't say he spent 6 months trying to buy its predecessor

https://archive.ph/H8SIk - Before Mark Zuckerberg Tried To Kill TikTok, He Wanted To Own It

https://archive.ph/liFKi - FACEBOOK’S PLAYBOOK TO BEAT COMPETITORS HAS HAD TO CHANGE WITH TIKTOK

https://archive.ph/9XSqi - Facebook Tries to Take Down TikTok

https://archive.ph/LWTHf - Reuters: Factbox: Facebook and TikTok's fraught history - quick look

https://archive.ph/H3dfJ - Facebook Parent Company Defends Its PR Campaign to Portray TikTok as Threat to American Children

Kind of stinks of less than valid motivations based on the timing of bringing this up over a decade after the fact.

To anyone on the side of anti-trust, it was clear even without that email as to how much Instagram and WhatsApp were growing, and thus Facebook was Standard Oiling.

Also the FTC is not exactly known for enforcing antitrust law very strictly.

The point is that they didn't acquire those companies to add to their business, they acquired them because their continued independent existence detracted from their business. Also known as competition.

Also "tiny 1 billion dollar acquisition" is not how I'd characterize what was the largest acquisition FB had made up to that point: https://archive.nytimes.com/dealbook.nytimes.com/2012/04/09/...

> Though Facebook is known for smaller acquisitions, Instagram’s surging momentum likely compelled the social network to swiftly put together a billion-dollar offer.

If you weren't aware, it's actually legal to buy a competitor. It just has to pass antitrust review.

E.g. In 2006, the government approved Google acquisition of Youtube which competed with Google Video: https://www.google.com/search?q=google+2006+acquisition+yout...

Companies buy/merge competitors all the time that passes FTC legal review. E.g. Boeing acquired competitor McDonnell Douglas. Hewlett-Packard acquired Compaq Computer.

And sometimes US government encourages mergers. E.g. US asks stronger bank buy a weaker competitor bank. It's been leaked that the US Govt is encouraging competitors Intel and AMD to merge ... so the USA semiconductor industry can be stronger and thus, less dependent on Taiwan TSMC and stay ahead of China.

https://www.google.com/search?q=us+government+encouraging+in...

Hell, even I wasn't this cynical back in those days. I was shocked as late as 2018 when Facebook began using SMS phone numbers for advertising, something they'd promised not to do (for obvious reasons.) https://www.cbsnews.com/news/facebook-said-to-use-peoples-ph...

- If I’m the politician, then I need to keep the company on the edge until the end of the trial where I promise them to be acquitted;

- If I’m the CEO, I need the trial to go through and acquit me, because it guarantees me against future trials.

https://www.techemails.com/p/mark-zuckerberg-instagram-fours...

On substantially identical charges, where the principle of double jeopardy holds sway.

I almost had one once, some time in the very early 2010s. After first login, the first prompt I saw was for my email account's authentication details, so that Facebook could "find my contacts for me."

I forget the exact language they used, but I know a boundary test when I see one, and I completed neither that nor any other further onboarding step, but immediately "deleted" the account - understanding this would not actually remove any information, but would deny me at least the temptation to develop what I could see would become a dangerous habit.

I don't exactly think I blame people who were slower to catch on, which is a relief, considering that appears at one time or another to have been about half the species and it would be a lot of work. But I would incline much less to say that mistrusting Facebook as early as 2018 would have been cynical, than that still to have trusted them so late seems remarkably naïve.

If there are 3 different grocery stores and two of them merge, though? That's a different matter.

And if 1 of the remaining 2 is the zero-waste organic store that only rich people and hippies use? It might not even be providing all that much competition.

Not specifically related to this case, necessarily, but if you let an acquisition go through and discover a decade later that it was, in fact, anticompetitive (and intentionally so), presumably you would still try to break up the resulting monopoly, even if you didn’t predict it would happen?

> Last year, documents for a standalone Facebook mobile photo sharing app were attained by TechCrunch. Now it seems Facebook would rather buy Instagram which comes with a built-in community of photographers and photo lovers, while simultaneously squashing a threat to its dominance in photo sharing.

Antitrust violations are a higher bar, you must improperly flex your dominant market position to violate the law. For that the government would have to show that FB offered an unreasonable price that nobody sane would match or that they threatened to cut off Insta links from FB if they didn't sell, something like that.

Google rise makes less sense but their position as king of search seems even more concrete than ever before (although LLMs might threaten that if they don't stay competitive I guess).

That plus scary TOS changes Instagram did immediately after acquisition

Seems like in your analogy there were plenty of grocery stores left.

They were busy doing things like bringing freedom and democracy to Afghanistan, having a financial crisis, stuff like that. Very important stuff. Social media? Oh yes I think my grandson told me about that.

[0] https://en.m.wikipedia.org/wiki/United_States_v._Alcoa

In 2020, the Wall Street Journal reported that FTC officials in 2012 had concerns about the deal raising antitrust issues. However, they were apprehensive about potentially losing an antitrust case in court if they sued to block the deal.[2] If they would lose then on the merits of trying to enforce the Clayton Act, it would set a precedent that likely could not be undone.

[1] https://www.ibtimes.co.uk/facebook-instagram-deal-down-747m-...

[2] https://www.wsj.com/articles/tech-ceos-defend-operations-ahe...

This implies that mergers between large services that have a network effect should always be prohibited, but why is that even a problem unless your goal is to thwart competition?

It would also create a useful incentive: Federated systems (like email) have a single network that spans entities. If Microsoft wants to buy Hotmail, they're not buying a separate network so you don't have to be worried about it even if they each have 25 million users as long as that's not too large a percentage of the billion people who use email. So then companies would want to participate in federated systems instead of creating silos like modern social networks do, because then they would be as strictly prohibited from doing mergers.

These are mergers that were allowed, but probably shouldn't have been because their industries were already quite consolidated by that point.

The ones that should be okay is when e.g. a company with 4% market share wants to buy a company with 0.5% market share. Companies merging when they each already have double digit percentages of the market is craziness.

> It's been leaked that the US Govt is encouraging competitors Intel and AMD to merge ... so the USA semiconductor industry can be stronger and thus, less dependent on Taiwan TSMC and stay ahead of China.

This sort of thinking is a demonstration of incompetence. AMD and Intel can both design competitive processors. AMD sold their fabs and now has the processors made by TSMC. Intel still makes them but their manufacturing process has fallen behind, to the point that they too have used TSMC to make some of their products. Saddling AMD with Intel's uncompetitive process would only put them both at a disadvantage against other competitors using TSMC.

The real problem here is that Intel was too vertically integrated and focused on producing only its own designs on its fabs, and then abandoned the low end of the market to sustain its margins. Which allowed TSMC to capture enough market share that the larger volume gave them enough capital to take the lead.

What the US needs is not mergers but the opposite -- its own TSMC as a competitive contract fab that can do the volumes needed to sustain a state of the art process.

https://techcrunch.com/2019/01/29/facebook-project-atlas/

This is something that people can claim to know from hindsight. When Facebook acquired it, Instagram was a photo sharing app that had 13 employees.

if you impulsively steal something and get caught, you are not guilty of planning to steal something, but you are guilty of stealing it.

monopoly is the same.

(WhatsApp only had, like, 50 employees when FB bought it for $19B, as a bit of evidence that headcount isn’t necessarily a measure of value.)

I believe intention and behaviour matters much more to antitrust than simply continuing to be a dominant market leader by smartly staying on top of what the public wants. Google search doing horizontal integration into Android and Chrome to cut off competition's market entry points at lower levels is far more plausible antitrust narrative IMO.

If a company, which had 13 employees at the time of acquisition and was ~2 years old, can be a legitimate threat to Facebook (which it was), then how strong is your monopoly, really?

For context, we've seen this play out multiple times in the last decade: with Snapchat to some degree but now, more importantly, with Tiktok.

Many consider Facebook a relic for old people. IG is rapidly meeting the same fate. It seems to be way more popular with millenials than Zoomers (anecdotally).

My point is that when the cost of user switching to a new platform is as simple as downloading a new app and creating a new login, then your "monopoly" lacks the traditional moat or barrier to entry that antitrust is specifically designed to fight.

Put another way: this just isn't as urgent as people are making it out to be and (IMHO) it's merely a shakedown by the current administration to get Meta to fall in line with censoring topics that the administration doesn't like.

They knew photos tracked better in news feeds

Also they new users don’t like to switch and get new followers

See Bluesky now. Hard to move even 1000 followers

I'm more concerned with YouTube owning all of social video. Movies are on a dozen streamers. Social stuff is on Instagram, TikTok, Reddit, and X. But video essays, independent animation, educational content, cultural critiques, music, video podcasts, trailers, gameplay, research, news - anything long form, serious, interesting - it's all trapped on YouTube as the only distribution platform. And they'll keep getting bigger with no possible alternative due to network effects.

I'm even more concerned with Amazon being a conglomerate [1] that is in online sales, hyperscaler infrastructure, consumer hardware, home automation systems, grocery stores, medicine, primary care, and movie production. And that they can leverage these synergies in grossly unfair ways.

I'm most concerned that the Apple / Google duopoly in mobile, web, and search has entrenched these two players across the vast majority of online transactions, interactions, and computational device usages. They collect margin on everything. They own your devices, they own search, they own the web, they own the apps, they have to be paid off to rank your business, have to be paid off to collect money, they regulate what you can do with your apps and websites, etc. etc. You jump through their hoops. This is their internet.

[1] Especially given the fact that Amazon can subsidize their efforts in these areas from profits in other business units and out-compete viable businesses in those markets. They can offer goods for free with an existing subscription and advertise far and wide across their retail website, plastered on their packaging, and emblazoned on the side of their delivery vehicles. Lord of the Rings got an 80 million dollar advertising package for free, whereas Bong Joon Ho's far more deserving film got next to nothing.

Innovation can't happen without Facebook's say-so, that's the monopoly, and over way too many people.

I think everybody on hackernews gets it. We're all pretty much on the same page.

Ain't nobody able to do anything about it though.

The actual simple photo sharing site was Flickr.

Instagram was seen from the start as a SNS with photo sharing as a pretense. The other SNS were already photo centric either way.

The top reply to the top comment has some useful quotes for the purposes of this discussion...

> This is not going to be one of the best tech acquisitions of the next decade.

> Instagram is a photo service in a sea of other photo services.

> Bookmark this comment. See you in 2022.

Heh.

“There are network effects around social products and a finite number of different social mechanics to invent. Once someone wins at a specific mechanic, it’s difficult for others to supplant them without doing something different.”

“One way of looking at this is that what we’re really buying is time. Even if some new competitors 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. Within that time, if we incorporate the social mechanics they were using, those new products won’t get much traction since we’ll already have their mechanics deployed at scale.”

Forty-five minutes later:

“I didn’t mean to imply that we’d be buying them to prevent them from competing with us in any way,”

Since it didn't happen it's pretty moot to the discussion. M&As with massive market consolidation like that get challenged all the time in courts so it's hard to say what would have happened then.

FTC investigated the Instagram purchase in 2012 and chose not to interfere.

So failed acquisition doesn't make buying Instagram inherently an anticompetitive move, just maybe can be spun as their strategy at the time, but a decade later the market still has plenty of players so it will be a tough case to make. Although even a failed case gives the government leverage over Meta with threats of future ones so they might not care.

https://www.joyoftech.com/joyoftech/joyarchives/1523.html

How about Google People? [1]

[1] https://qntm.org/perso

1. bullish 2. bullish 3. neutral 4. neutral 5. neutral 6. neutral 7. bullish 8. bearish 9. bearish 10. neutral

Of the top top-level comments, you have to go all the way to #8 to find a bearish comment.

Replies to the top comment are more bearish because they're directly responding to a bullish sentiment.

The FTC investigation specifically had a condition that they would reevaluate the acquisition in coming years. This was widely expected to be done, and everyone knew about it at the time of the acquisition.

- Larrys 2012

What is more significant is what Meta did since then.

I do think Meta didn't see simply a photo sharing app, they saw another social graph they could ingest. They did this quite successfully.

They could argue that the decision was made based on declarations that did not align with the private conversation that Zuckerberg had at the time, as those emails came out since.

https://googleblog.blogspot.com/2010/02/introducing-google-b...

it is concern for someone outside western hemisphere, in Asia especially META dominance is even stronger

A) that would be considered bad law now.

B) despite all branches of government going after Alcoa (Congress passing a special law to support the case mid way through), nothing happened upon remanding the case to the lower court due to the successful argument that other companies began competing

C) that would never happen now primarily due to only anticompetitive practices being scrutinized, not merely having the ability to control prices. But now I see where the confusion comes from, a 13 year saga in support of the Sherman Act

D) it’s so interesting how much the country changed solely from trying to differentiate itself from communism. So its gone to more of an extreme of private maximum extractable value.

Yes, but: despite all of us adblocking them, this is all supported by their ad revenue.

The discovery effect is simply too powerful. I can't really see a way out of this because people are not going to go back to paying for media. Possibly the only way is something like the increasing control of social media from the EU forcing a separate EU Youtube, which might include things like the French TV rules forcing a certain amount of content to be in French, plus control over foreign disinformation influencers.

(you know what the only other social video platforms are with millions of users? Bilibili, xiaohungshu etc.)

Sure, but it was a serious threat to Facebook with hordes of especially younger people moving away from FB in favor of more activity on Instagram, which at that time had evolved from "just" a photo making/sharing app to a social network.

The top comment compares it to YouTube as a great acquisition.

Isn't what matters in the end is whether there is still an effective market left as a result?

It seems that Mark himself is arguing that by the nature of the network effects of social media, first movers have a natural monopoly advantage that's hard to break.

The regulators should be focusing on that - ie enforcing rules which limit the monopoly advantage due to network effects.

Take the telecomms space - if somebody got first mover on a phone system and it wasn't interoperable with any others - then once established they would have a monopoly. The way you break that is to force interoperability - not allow companies to use access to the network as a competition barrier.

An example in the Meta space - as far as I can tell it was not possible for me to send a message to somebody in Whatsapp without going via whatsapp - ie there is no network access from a different app.

This appears to be exactly what the EU is focussed on - enforcing interop.

https://engineering.fb.com/2024/03/06/security/whatsapp-mess... https://en.wikipedia.org/wiki/Digital_Markets_Act

This case is particularly wrong, as that iPod quote is from Slashdot. HN didn’t even exist in 2001.

https://slashdot.org/story/01/10/23/1816257/apple-releases-i...

People forget that the Android app and the aquisition announcement came out like one week apart. The basic web version didn't come out until half a year later.

My point is it already had a solid rich, influencer-y userbase + was about to become available on more platforms. Aquisition definitely had an impact on the user growth, but the growth itself was already inevitable.

Facebook knew what it was doing and the emails plainly reflect that

But before 2013 there were methods on both iOS and Android for an App to get a list of all OTHER installed apps on the device.

Facebook had the means to know exactly at which rate each app was growing and how many of the users they have to share with it, the facebook app itself was gathering this info.

They could gather enough data to even calculate how much user-attention they lose after each app is installed on a users' device.

--

Onavo was then acquired in 2013, right when Apple started to lock-down those app-scanning methods with iOS7.

So it appears that the company was acquired to be able to KEEP doing something they have already been doing before that with the facebook app.

Source: https://www.in2013dollars.com/us/inflation/2012?amount=10000...

FaceBook was literally collecting data on what apps people were using on their phones and empirically saw the rise of Instagram. Of course the rise of Instagram didn't need to continue but that's why you buy all the realistic competitors so even if most of them fail you have a moat of dead companies.

If everyone knew, why was the purchase allowed?

Any one of them could have taken off and eaten facebook's lunch. Instagram was the winner in a sea of camera apps because facebook threw unlimited resources into the hip app of the moment.

Not sure anyone thinks thats true at all.

And growing quickly, so:

> In his opening remarks, Mr. Matheson mentioned documents, including what he described as a “smoking gun” February 2012 email in which Mr. Zuckerberg discussed the rise of Instagram and the importance of “neutralizing a potential competitor.” In another email, in November 2012 to Ms. Sandberg, the chief operating officer at the time, Mr. Zuckerberg wrote, “Messenger isn’t beating WhatsApp, Instagram was growing so much faster than us that we had to buy them for $1 billion.”

> The F.T.C. showed Mr. Zuckerberg a 2011 email in which he wrote, “We really need to get our act together quickly on this since Instagram is growing so fast.”

* https://archive.is/https://www.nytimes.com/2025/04/14/techno...

> It’s a combination of neutralizing a competitor and improving Facebook, Zuckerberg said in a reply. “There are network effects around social products and a finite number of different social mechanics to invent. Once someone wins at a specific mechanic, it’s difficult for others to supplant them without doing something different.”

> Zuckerberg continued: “One way of looking at this is that what we’re really buying is time. Even if some new competitors 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. Within that time, if we incorporate the social mechanics they were using, those new products won’t get much traction since we’ll already have their mechanics deployed at scale.”

> Forty-five minutes later, Zuckerberg sent a carefully worded clarification to his earlier, looser remarks.

> “I didn’t mean to imply that we’d be buying them to prevent them from competing with us in any way,” he wrote.

* https://www.theverge.com/2020/7/29/21345723/facebook-instagr...

Now? That would be a small preseed round.

I dislike meta but wouldnt call their ownership of instagram anti competitive monopolistic.

We don't seem to spend half as much energy taking major news outlets to task when they similarly guess wrong, unless we feel that somehow adding a question mark negates any responsibility (i.e. "The Ouya will revolutionize gaming" vs. "Will the Ouya revolutionize gaming?").

https://support.google.com/answer/1083134?hl=en

https://support.google.com/orkut/?hl=en

> Integrating their products with ours to improve the service is also a factor. But in reality, we already know these companies’ social mechanics, and we will integrate them over the next 12–24 months anyway. The integration plan involves building their mechanics into our products rather than directly integrating their products, if that makes sense, by a combination of these two things: neutralizing a potential competitor, integrating their products with ours to improve the service.

> One way of looking at this is that what we’re really buying is time. Even if some new competitor springs up buying Instagram, Path, Foursquare, et cetera, now will give us a year or more to integrate their dynamics before anyone can get close to their scale again. Within that time, if we incorporate the social mechanics they are using, those new products won’t get much traction because we will already have their mechanics deployed at scale.

https://www.acquired.fm/episodes/meta