Instagram co-founder Kevin Systrom delivered trial testimony today accusing Meta Platforms’ Chief Executive and Facebook founder Mark Zuckerberg of “starving” Instagram of vital resources and decision-making based on “a lot of emotion” around which founder’s app was better, offering a boost to the US Federal Trade Commission’s antitrust litigation seeking to break up the companies.
Instagram co-founder Kevin Systrom delivered trial testimony today accusing Meta Platforms’ Chief Executive and Facebook founder Mark Zuckerberg of “starving” Instagram of vital resources and decision-making based on “a lot of emotion” around which founder’s app was better, offering a boost to the US Federal Trade Commission’s antitrust litigation seeking to break up the companies.“Mark never had one specific opinion about whether Instagram was good or bad for Facebook,” Systrom testified during a full day on the stand in District of Columbia federal court.
Systrom claimed that Meta’s technical infrastructure and spam-fighting assistance weren’t part of why he agreed to move forward with the deal, later linking his departure from Meta’s “family” of apps around 2018 to an “unacceptable and offensive” denial of resources to Instagram as Zuckerberg mismanaged a pivot to video-focused content.
The former Instagram CEO would later acknowledge during an often frosty and meandering cross-examination from Meta attorney Kevin Huff that Instagram’s founders early on had a special ringtone to notify them when servers would go down, giving Systrom “PTSD” from alarms that went off “every hour to fifteen minutes” during some periods.
After he joined Meta, Systrom said Zuckerberg made all final hiring decisions by sitting down with a spreadsheet and deciding “who got what.” That included giving Instagram “zero” additional bodies during a major investment in user privacy and safety following the Cambridge Analytica scandal (see here).
Internal Meta documents shown today described an effort to increase advertising on Instagram in order to try and boost engagement on Facebook, a move Systrom called a “terrible tradeoff.”
It is “very well known” that more ads leads to less time spent on digital platforms because “users don’t like ads,” and they can degrade customer experience “both in terms of sentiment and actual usage,” the Instagram founder testified.
A key bone of contention between Meta and the FTC is whether Instagram and WhatsApp would have flourished absent Facebook’s acquisitions of the companies in 2012 and 2014, respectively.
At one point when FTC attorney Bob Zuver asked Systrom about whether Instagram could have developed video and messaging features had it remained independent, a Meta attorney objected to the questioning, calling it speculation.
US District Judge James Boasberg overruled the objection, grinning as he said that assessments of the “but-for world” where the acquisition never happened “is going to be all speculation.”
The key question, he added, was whose speculation was more well-founded.
— Post-acquisition —
“I’m both incredibly happy and also incredibly relieved that we finally got this deal done,” Facebook’s first president, Sean Parker, said in an April 2012 email to Systrom shortly after Meta’s $1 billion acquisition.
Parker introduced himself in the email as “a large Facebook shareholder” who had been “prodding” Zuckerberg and others “to do this, do it quickly, and do it at any cost.”
The risk of Facebook not buying Instagram — and “someone like Google snapping you up” — was beginning to make Parker and a lot of other major shareholders “extremely uncomfortable,” he wrote to Systrom.
The personnel management system at Meta, according to Systrom, involved a budgeting process where each team at the company entered requests for a specific share of all new hires.
Those requests would go to Zuckerberg, who made all final decisions about headcount, Systrom said.
Instagram was “given people every year,” he testified, “but not as much as you’d get if someone wanted to actually invest in something as good as Instagram was in the world.”
In 2014, Systrom started a chat session with Peter Deng, then the director of product management at Meta.
Systrom told Deng he didn’t understand why the “growth team” assigned to work with Instagram based on Facebook’s playbook had inexplicably been told to step off.
Later during cross-examination, Systrom agreed that Facebook had the “best growth team in the world,” but only if “you can use them.” Instagram had to later develop their own growth team, he said.
In June 2016, Systrom made what he called a “last-ditch effort” to go over the top of recruiters at the company and procure additional personnel to work on Instagram’s products.
“We have areas that are starving,” Systrom said in an email to former Chief Technical Officer Mike Schroepfer and another company executive. Systrom testified that work on comment and search features at Instagram had “few or no people working on them.”
In September 2017, Systrom emailed Deng and Instagram’s Chief Operating Officer at the time, Marne Levine.
“We were given zero of 300 incremental video heads which is an unacceptable and offensive outcome,” Systrom wrote.
The Instagram founder pointed out how important video has become for modern digital platforms, contrasting high levels of engagement with video content with his inability for Meta to fund an “existential area” of competition with challengers like Snapchat around the end of 2017.
The Instagram founder said he believed that Zuckerberg was not investing in Instagram because the Meta CEO thought the photo-sharing app was a “threat” to the growth of Facebook.
In internal communications shown during the first week of trial, Zuckerberg described to key Meta executives how unchecked growth at Instagram could lead to “cannibalization” of Facebook users to the point of “network collapse” (see here).
Systrom also discussed a process whereby Zuckerberg enlisted Meta’s top growth executive, Javier Olivan, to draw up a list of features Meta could “dial up or down” to affect how Instagram grew.
Shutting those integrations off would affect 14 percent of Instagram’s monthly growth year-over-year, according to the document. It listed features related to Facebook bookmarks, cross-posting across apps, data usage and advertisements.
During a meeting with Zuckerberg, Systrom said he recalled the Meta CEO saying, “We’re going to go turn all of those off now.”
In a July 2018 email, Systrom informed his team that “Mark has decided that Instagram will no longer have any links in the Facebook app.”
Zuckerberg’s rationale for the move, Systrom said, was to address Facebook’s “growth challenges” in the US by removing any “potential headwind” to that growth.
“Since data shows that when people adopt Instagram, they use FB slightly less, his hope is that this action will buy FB some time to turn around this trend,” Systrom wrote. “To be clear, though, all the data we have is that IG is incredibly incremental to the family.”
Asked by the FTC whether Zuckerberg was “happy” about Instagram’s net positive impact on Meta, even if it involved an engagement trade-off with Facebook, Systrom responded by calling the question “really complex.”
Systrom’s experience with Zuckerberg, he said, was that “he was always very happy to have Instagram in the family.”
“We did great product work,” he added, but because Zuckerberg had founded Facebook, “he felt a lot of emotion” around whether Instagram or Facebook was “better.”
Under cross-examination, Systrom said he didn’t know which features were ultimately turned off because he ended up leaving the company.
An “important moment” for Systrom in 2018, shortly before he decided to leave Meta, was when Instagram failed to secure additional personnel around the time the app announced it had surpassed one billion users.
While that user pool made the app a little less than half the size of Facebook, Instagram only had around 1,000 total employees compared to Facebook’s roughly 35,000, he said.
— Competition, growth —
During cross-examination by Huff, Systrom discussed the various competitors to Instagram and Facebook both before and after the companies’ merger.
“TikTok wasn’t competing directly with Facebook on their social networking aspect, but they were competing for time and attention,” he said.
Prior to Meta’s acquisition, Systrom testified that he spent less than “one percent” of his time worrying about competition from Facebook and didn’t see Instagram as a potential replacement social network.
“A pure alternative? No,” Systrom responded. Instagram was more of a “complement” to Facebook, he said.
At one point, Huff accused Systrom of “lying” to Zuckerberg and others about Facebook link traffic to Instagram being “what got us to where we are today.”
“Sir,” Systrom responded. “Lied?”
Huff also asked Systrom whether he was “misleading” Zuckerberg about the overlaps between Instagram and Facebook during the pre-acquisition negotiations.
Systrom responded that his selective highlighting of certain parts of the businesses was a “negotiation tactic,” portraying Zuckerberg’s promises to allow Instagram independence and support for its growth as examples of the same strategy.
Those promises from Zuckerberg were among the most important factors that Systrom took into account before accepting the offer to be acquired.
Systrom agreed with Huff that, at least until 2018, Meta kept its commitment to keep Instagram independent and that during his tenure Instagram grew “incredibly fast.”
Time spent on the app was “the most important metric” for Facebook for a “period of time,” Systrom testified, and that made it important to his team because Instagram was “part of the Facebook family.”
Systrom also said Facebook got a “screaming deal” with its $1 billion acquisition, and that Instagram had generated hundreds of times that price since being incorporated into Meta.
“Sometimes you make a bet and it turns out well,” he said, “and I think Mark did that.”
Systrom acknowledged previously making the statement that merging with Facebook was like “strapping yourself to a rocket ship,” but today he told Huff that’s not necessarily what happened after the merger.
“I think that’s why we’re here,” Systrom responded.
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