Sheryl Sandberg, the former chief operating officer of Meta, said in a landmark antitrust trial on Thursday that the social media giant faced strong competition and that it nurtured and grew Instagram after buying the app, countering accusations that the company illegally stifled rivals.
In her second day on the stand, Ms. Sandberg, who left Meta in 2022, said the company feared the rise of TikTok around 2020 and how the video app’s popularity could eat into Meta’s advertising revenues. 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. Meta employed a “buy-or-bury strategy” to consolidate its power, the government has argued. The government plans to seek a breakup of the company if it wins.
The case — Federal Trade Commission v. Meta Platforms — has so far hinged on a trove of internal documents in which executives discussed concerns about competition from start-ups. Mark Zuckerberg, Meta’s chief executive, spent 10 hours on the stand as the first and marquee witness in the trial, which started on Monday. Judge James E. Boasberg, who will decide the case, is presiding over the trial in the U.S. District Court for the District of Columbia.
The case may be challenging for the government to win because the Instagram and WhatsApp deals were approved by regulators more than a decade ago. 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 correspondence showing executives were anxious about not only Instagram and WhatsApp, but also other social media start-ups like Pinterest, Foursquare and Path. In the emails and text messages, some of which date to the mid-2000s, Mr. Zuckerberg expressed concerns about how up-and-coming apps had the potential to unseat Facebook.
Mr. Zuckerberg conferred with Ms. Sandberg and other top lieutenants, firing off late-night missives listing the pros-and-cons of buying a would-be competitor. He wanted to stamp out young apps by starving them of resources, the F.T.C. argued. Mr. Zuckerberg countered that he was doing a “build versus buy” analysis, which was fairly typical among tech companies.
Ms. Sandberg, who was an important figure in the purchases of Instagram and WhatsApp, testified that by 2018, TikTok was a threat to Meta. At the time, Facebook and Instagram did not have a comparable video product. That spurred Facebook to create Reels, a short-form video feature, she said.
In a 2020 document, Meta executives detailed spending more than $500 million to build Reels, including hiring more than 1,000 additional employees and paying for licensing fees and other items. The bet paid off. In testimony this week, Mr. Zuckerberg said that short-form video now accounts for half of the time spent by users on Facebook and Instagram.
On Thursday, Ms. Sandberg also argued that Meta turned Instagram into a star app, which would not have grown as quickly without the larger company’s resources. The only reason to buy a company is if it becomes “more valuable to an acquirer than on its own,” she said.
In emails from before the 2012 deal for Instagram, Ms. Sandberg also said the $1 billion price to buy the photo-sharing app was too high, a moment that elicited muted laughter from some present in the courtroom. The deal has since been viewed as a coup for Meta, with Instagram now integral to the company’s business.
In her testimony on Wednesday, Ms. Sandberg said that given Instagram’s success, “I was wrong. Very wrong.”
Mike Isaac is a technology correspondent for The Times based in San Francisco. He regularly covers Facebook and Silicon Valley.
Cecilia Kang reports on technology and regulatory policy for The Times from Washington. She has written about technology for over two decades.
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