Sheryl Sandberg Testifies at Meta Antitrust Trial about Competition and Instagram Deal
In her second day of testimony, Ms. Sandberg said that Meta feared TikTok’s rise around 2020, and how its popularity could eat up Meta’s advertising revenue. In a document presented to the board of directors in 2020, she wrote that TikTok’s ascent could take $3 billion to $6 billion from Meta’s revenue as its users spent less time on its apps, which include Facebook, WhatsApp and Instagram.
“It’s a big deal,” Ms. Sandberg said in her testimony, referring to Meta executives’ concern for their business at the time. “Wall Street doesn’t particularly like misses of any size, but especially in the billions.”
The U.S. government has accused Meta, formerly known as Facebook, of illegally cementing a social media monopoly by buying young rivals such as Instagram for $1 billion in 2012 and WhatsApp for $19 billion in 2014. The government claims that Meta used a “buy or bury strategy” in order to consolidate its position. The government will seek to break up the company if they win. Mark Zuckerberg, Meta’s chief executive, was the first and most important witness in the trial that began on Monday. He spent 10 hours at the stand. Judge James E. Boasberg is presiding the trial at the U.S. District Court for the District of Columbia. It is also hard to prove the hypotheticals of what might have happened had Meta not bought Instagram and WhatsApp and whether or not they would have been as successful.
During the trial this week, F.T.C. Lawyers highlighted years of internal Meta communication that showed executives were worried about Instagram and WhatsApp as well as other social media start ups like Pinterest Foursquare and Path. In emails and texts, some dating back to the mid 2000s, Mr. Zuckerberg expressed concern about the potential for up-and-coming applications to unseat Facebook. Zuckerberg discussed the pros and cons with Ms. Sandberg, and other top lieutenants. He sent late-night emails listing the pros and con of buying a potential competitor. The F.T.C. argued that he wanted to eliminate young apps by starving their resources. argued. Mr. Zuckerberg countered that he was doing a “build versus buy” analysis, which was fairly typical among tech companies.
Ms. Sandberg, a key figure in the acquisition of Instagram and WhatsApp testified that TikTok posed a threat to Meta by 2018. Facebook and Instagram didn’t have a similar video product at the time. She said that Facebook created Reels, a feature for short-form videos. The bet was a success. In testimony this past week, Mr. Zuckerberg stated that short-form videos now account for half of all time spent on Facebook and Instagram. She said that the only reason to purchase a company was if it became “more valuable for an acquirer than by itself.” Since then, the deal has been viewed by Meta as a success, with Instagram being a key part of their business. Very wrong.”
