Mark Zuckerberg, the first witness in the US Federal Commerce (FTC) judgment that seeks to dismantle his empire on social networks, offered a rare vision on how to make business decisions: fighting for survival even when his company is ahead.
During a three -day marathon of testimonials, the co -founder and CEO of Meta Platforms clearly articulated how the social networking market has evolved rapidly over time – which, if the judge agrees, can make FTC proof difficult for the goal to dominate the sector.
Zuckerberg was calm, but occasionally evasive when challenged to explain old emails and other private messages that indicated a coordinated effort to eliminate competitors.
These messages, collected during the pre-judgment process, were more compromising than their current testimony. Communications, often between Zuckerberg and other high -ranking executives, portrayed a paranoid executive in relation to their rivals and willing to acquire competitors whenever possible.
The FTC seeks to force the goal to sell Instagram and WhatsApp, arguing that these acquisitions have given the goal an illegal monopoly on parts of the social networking industry. Emails and documents presented at the trial show that the goal, then called Facebook, had difficulty competing during the mobile apps boom in the early 2010, acquiring successful competitors. The FTC said the goal has bought these companies to eliminate direct competitive threats.
Diversified competition
Zuckerberg and Goal’s lawyers, in turn, argued that the company faces a wide range of competitors competing for users’ attention, including bytedance’s Tiktok. Google’s YouTube, Apple’s imessage and Microsoft LinkedIn. On Wednesday, Zuckerberg pointed out that Tiktok, in particular, represented a “highly urgent” competitive threat when it emerged in 2018.
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“We observed that our growth has dramatically slowed as Tiktok gained popularity,” said Zuckerberg. “It was a top priority for the company for several years.” The goal ended up launching a direct competitor named Reels, which now generates a significant amount of video traffic to the company.
During his three days in court, Zuckerberg was, at times, vague and regularly contested FTC’s interpretations of his previous emails. As a leader, his communication with the team was often direct or hard, and he spent time in the testimony trying to add nuances to what he had written in past communications. At one point, he conflicted with FTC’s main lawyer Daniel Matheson, who objected Zuckerberg to answer his questions.
The impact of old emails, however, remains uncertain as US district judge James Boasberg, who chairs the case, prepares to make his decision. The goal argued that the intention behind the acquisitions does not matter, only if these businesses resulted in damage to consumers, which the company disputes.
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Bomberg had already stated that the FTC would face challenges. Despite allowing most of the case to continue last November, the judge adopted a skeptical tone about the chances of the FTC in the trial. “Winning here, however, does not obscure the fact that the commission faces difficult issues about whether its allegations may be sustained in the seizure of the trial,” said the judge. “In fact, their positions, at times, stretch the antitrust precedents of this country to their limits.”
Bomberg also stated, in a decision shortly before the trial, that the FTC should prove that the goal is currently damaging competition.
Sheryl Sandberg, former director of operations of the company, followed Zuckerberg in the Witness Bank, facing incisive questions from FTC lawyer Susan Musser.
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If the FTC prevails, the separation of Instagram and WhatsApp would dismantle years of integration between the applications, destabilizing two of the world’s most popular digital products and potentially erasing hundreds of billions of dollars from the target market value. This would also raise serious questions about how the government evaluates and approves business as it allowed transactions to occur at the time.
“Network Effects”
Part of the FTC case involves the technical concept of “network effects”, which means that the more users a company as the goal has, the more likely it is to maintain a dominant position, as people are less likely to move to a service used by a reduced number of users.
Bomberg remained largely silent during the question, but intervened during Zuckerberg’s testimony on Wednesday to ask if the network effects are still relevant.
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“How much does that matter if your friends are on a specific platform if you can send content out of this platform? Why is this relevant if your friends are there?” questioned the judge.
Zuckerberg replied that this doesn’t matter. “These apps now serve mainly as discovery engines,” he said. “People can take this content to messaging engines.”
Support from a larger company
Under questioning the goal lawyer, Mark Hansen, Zuckerberg refuted FTC’s argument that the goal acquired Instagram to eliminate a competitor. He stated that Instagram would probably not have been able to grow so much if he had remained independent. “Instagram has become a much more vibrant service” as a result of the deal, said Zuckerberg.
Bringing a small online platform to one billion users and besides it is unlikely to happen without the support of a larger company, he said. “Every company that has this level of scale is the property of a larger company,” he said, quoting Tiktok and Youtube as examples.
Earlier at the trial, it was revealed that Snap Inc.’s Evan Spiegel rejected a $ 6 billion Facebook acquisition offer in 2013 for his Snapchat application. Zuckerberg stated that the application would have grown faster if he had joined his company.
He sought to retract from some statements made in previous internal communications, recognizing that he sent an email in 2013 saying that Facebook blocked ads to messages such as WeChat, Kakao and Line, stating that these applications were “trying to build social networks to replace us.” However, in this week’s statement, he said, “It’s hard for me to characterize what their intention was.”
Matheson also tried to demonstrate that the goal was aware of his antitrust risk years ago, including the possibility of separation.
He introduced a 2018 email in which Zuckerberg suggested that the goal considered to break up Instagram in an independent company. “As the appeals grow to break up large technology companies, there is a non -trivial chance that we will be forced to separate Instagram and perhaps WhatsApp over the next 5 to 10 years anyway,” he wrote.
At one point, Zuckerberg was questioned by Hansen about how he evaluated the competitive threat represented by Instagram and others at the time of the business. He referred to a quote from the former CEa of Intel, Andy Grove: “Only paranoids survive.”
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