The head of Instagram faced pressure from Facebook executive Mark Zuckerberg in 2018 to meet Wall Street expectations while declining growth and TikTok’s rise created an “existential problem” for the photo and video-sharing platform, according to testimony and internal company documents presented today in antitrust litigation brought by the US Federal Trade Commission against Meta Platforms.
The head of Instagram faced pressure from Facebook executive Mark Zuckerberg in 2018 to meet Wall Street expectations while declining growth and TikTok’s rise created an “existential problem” for the photo and video-sharing platform, according to testimony and internal company documents presented today in antitrust litigation brought by the US Federal Trade Commission against Meta Platforms.“For us, growth is everything,” Instagram head Adam Mosseri testified today in Washington, DC, federal court. “If you’re not growing, you’re slowly dying.”
Instagram grew at a healthy rate from 2015 until about mid-2018, when it “hit a bit of a wall” after the time spent per person — 36 minutes — “plateaued,” Mosseri said.
Instagram’s short-form video feature, Stories, had been the main driver of engagement, according to Mosseri. But an internal 2019 analysis estimated 40 percent of Instagram’s year-over-year decline in time spent was due to TikTok.
Facebook’s news feed is “going away” as a place for people to connect with friends and family and for Meta to generate advertising revenue that helps power the $1.5 trillion social media company’s family of apps, Mosseri said today.
Mosseri, who started at Facebook in 2008 when it was still just a website, described the period around 2018 as a key strategic inflection point for a major tech company that had already successfully weathered multiple “paradigm shifts.”
“TikTok is the fiercest competition we’ve faced during my tenure at the company,” he said during cross examination today. Mosseri also said Facebook’s 2012 purchase of Instagram for $1 billion “might be one of the best acquisitions of all time.”
Internal documents raised during trial proceedings today showed the Instagram chief at times clashing with Facebook Chief Executive Mark Zuckerberg over pushes to increase ads on the platform and business strategies that Mosseri said “risk breaking some of the core assets we have to bring people together.”
But as of today, Instagram’s 230 million-plus user base in the US has almost “caught up” to Facebook, he testified.
The FTC, which is seeking to break off Instagram and WhatsApp from Meta as part of antitrust litigation over personal social networking, sought to portray the tech giant as a monopolist on the ropes.
— Ad load —
Around the same time Instagram was grappling with this “existential problem” for the business, as Mosseri put it on the stand today, he was facing pressure from Zuckerberg to meet the expectations of Wall Street.
“Mark is pushing hard for two things (1) pull levers now to help make our Q3 expectations and (2) bring Instagram ad load policies to parity with [Facebook’s] sooner rather than later,” Mosseri said in an internal e-mail to a colleague in August 2018.
Ad load refers to the proportion of ad to non-ad content presented to users on apps like Facebook and Instagram. Because the price of the product provided by Meta in the FTC’s alleged “personal social networking services” market is effectively zero, the agency must show the tech giant exercises monopoly power through consumer harms like increased “ad loads” that users can’t avoid.
Mosseri’s e-mail said that Instagram was already working on loosening rules to increase the quantity of ads shown to users before Zuckerberg’s push, “but not as quickly or at the same time.”
During his testimony last week, Meta Vice President for Monetization John Hegeman had acknowledged the existence of a “dynamic ad load system” that can adjust the advertising saturation levels on feeds for particular users (see here).
Mosseri echoed an argument raised during the testimonies of Hegeman and former Facebook Chief Operating Officer Sherly Sandberg that raising ad load wouldn’t detract from user experiences when those increases were accompanied by an increase in the quality and relevance of those ads.
In an internal study from 2019 that surveyed 230,000 Instagram users worldwide, introduced into evidence by the FTC today, the top two complaints about the app’s user experience were about seeing too many ads on Instagram and Instagram Stories.
— Facebook v. Instagram —
During the same month when Zuckerberg was pressuring Mosseri to get Instagram’s numbers up, the two were also debating the future strategy of the company’s growing family of apps.
In an August 2018 e-mail thread, Mosseri raised concerns about a dynamic that emerged from internal documents and trial testimony from Instagram co-founder Kevin Systrom.
Systrom said he believed that Zuckerberg was not investing in Instagram because he thought the photo-sharing app was a threat to the growth of Facebook (see here).
Zuckerberg, meanwhile, was talking about the threat posed by the possibility that unchecked growth at Instagram could lead to “cannibalization” of Facebook users to the point of “network collapse” (see here).
As a veteran leader of product development on the Facebook app who has transitioned to head work on Instagram, Mosseri said he was stuck in the middle of “anxiety and heated conversations at the time” decisions were being made to stop promoting Instagram and share less friend data.
— Network effects —
Alex Schultz, Meta’s chief marketing officer and head of analytics, also testified today for approximately an hour.
In a May 2016 e-mail to WhatsApp co-founder Jan Koum and a colleague, Schutlz described how “network effects are hard to beat.”
“After 4 years of watching eBay try to kill itself from the inside I was incredibly impressed at how hard it was to kill something with real network effects,” he said, and it was “super super hard” to disrupt a group of Facebook’s competitors “even with a superior product.”
Schultz also testified about some analysis of Facebook and Instagram’s networks which he shared with Zuckerberg in 2018.
During a “connections pivot” in 2016 when Instagram began focusing more on friends and family connections, Instagram’s users increased, Schultz testified.
That move came after “a lot of difficult conversations with Systrom,” according to Schultz.
Schultz has spent considerable time in the courtroom during trial proceedings as the parties have fallen behind schedule and the order of witnesses has shuffled.
When asked by Meta attorney Mark Hansen whether Schultz had heard Systrom's testimony that Facebook's growth team was the "best in the world," he answered in the affirmative. "It was very touching, honestly."
Schultz said after he finally "broke through" with Systrom about the importance of incorporating greater friends and family connectivity on Instagram — and the company saw excellent results from the move — the two enjoyed a much closer and positive working relationship.
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