Mark Zuckerberg considered spinning off Instagram into a separate company in 2018 as he increasingly became concerned that the photo and video app’s success was hurting the Facebook social network.
Zuckerberg, who is testifying for the second straight day in the US Federal Trade Commission’s antitrust trial, wondered whether Meta Platforms Inc., then known as Facebook Inc., “should consider the extreme step of spinning Instagram out as a separate company.”
Zuckerberg acknowledged that he thought Meta may be broken up in the next 5-10 years, and it was worth exploring whether they should get ahead of this possible outcome. When explaining his thinking in court, Zuckerberg said he needed to “take into account the direction that the politics seemed to be going at the time.”
In May 2018, Zuckerberg wrote to his senior leaders: “I’m beginning to wonder whether spinning Instagram out is the only structure that will accomplish a number of important goals.” One of the benefits, he wrote, was reducing the “strategy tax” of trying to coordinate the two apps and keep them working in tandem.
Another benefit would be to “immediately stop artificially growing Instagram in a way that undermines the Facebook network,” he continued. At the time, Facebook would show users if a photo they were seeing on their news feed originated in Instagram, and link to the app.
“Again, I’m not saying we should actually do this now,” he wrote. “But as we consider it, we should keep in mind that there’s a real chance that all our work to build a family of apps may be something we don’t get to keep.”
The messages came forward as part of the FTC’s antitrust trial against Meta, which started Monday and is expected to last at least eight weeks. The FTC alleges that Meta’s acquisitions of Instagram and WhatsApp in 2012 and 2014 respectively, helped the company create a monopoly in the social networking industry.
Zuckerberg was questioned by FTC lawyer Daniel Matheson and was asked about Facebook’s relationship with Instagram following the acquisition. Emails and other internal documents show that Zuckerberg grew frustrated that Instagram was benefiting off of Facebook, but not returning enough back to the company.
At one point he ordered executives to put more ads on Instagram so that Facebook was not carrying so much of the business load. He also stopped doing some in-app promotions for Instagram on Facebook to stop sending user traffic from the company’s core social network to Instagram, the documents show.
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