In an internal email surfaced as part of the Meta antitrust trial,<\/a> Meta CEO Mark Zuckerberg fretted about the potential that the company\u2019s Instagram acquisition<\/a> may cannibalize Facebook. Were that to happen, it could lead to the \u201cnetwork collapse of the more engaging and profitable product,\u201d a worried Zuckerberg told other Meta executives in a confidential message.<\/p>\n Zuckerberg proposed multiple ways to prevent this cannibalization from occurring, including building more bridges between Meta\u2019s apps to make them function as a single network (suggesting that Instagram was contributing to Facebook\u2019s loss of cultural relevance<\/a>). He also openly wondered if Facebook would be better served by spinning out Instagram as a separate business.<\/p>\n In its trial against Meta, the U.S. Federal Trade Commission (FTC) is attempting to prove that the company is operating a social networking monopoly and that its acquisition of competing apps like Instagram and WhatsApp allowed it to maintain its dominant position in the market. As evidence, the prosecution is surfacing emails and other messages that indicate that Zuckerberg understood the threat Instagram posed to Facebook, even after it became a part of Meta\u2019s larger family of apps.<\/p>\n In an email dated May 2018, Zuckerberg explained to other Facebook executives \u2014 including Meta Chief Product Officer Chris Cox, now former COO Sheryl Sandberg, former CTO Mike Schroepfer, former Chief Growth Officer (now COO) Javier Olivan, and former CFO David Wehner \u2014 that he was concerned the company\u2019s approach to its family of apps was not correct.<\/p>\n Specifically, Zuckerberg was worried that Instagram\u2019s growth could hurt Facebook itself, saying that internal data shows that when users joined Instagram, their Facebook engagement \u201cdeclines significantly.\u201d<\/p>\n \u201cWe are starting to get more data that suggests this hollowing out of Facebook usage compounds as a larger percent of the population gets on Instagram,\u201d Zuckerberg wrote in a section of the email titled \u201ccannibalization and network collapse.\u201d<\/p>\n The more the company pushed Instagram\u2019s growth, the greater the threat Instagram posed to Facebook, Zuckerberg appeared to conclude.<\/p>\n \u201cThis raises the issue that our models for the future may be wrong,\u201d Zuckerberg continued. \u201cWe currently expect both Facebook and Instagram to be able to grow, but it seems likely to be the case that if we promote Instagram to be around the same size as Facebook, that will have significant negative effects on Facebook that we are not currently modeling,\u201d he wrote. \u201cThat is, the Facebook network can likely sustain decreased engagement among some of its members, but if engagement among its entire population is hollowed out, that may lead to significantly worse outcomes than we currently expect,\u201d Zuckerberg said. <\/p>\n He also said that Instagram\u2019s growth was mainly being driven by distribution from the Facebook app and its use of the Facebook friend graph.<\/p>\n \u201cWhat this suggests is that while we hope to grow two products, there\u2019s a real chance we may be causing network collapse of the more engaging and more profitable product to replace it with one that is less engaging and less profitable,\u201d Zuckerberg said. <\/p>\n As a result, he said that Facebook was reducing its promotions to Instagram and that Instagram should introduce new integrations that would tip the balance back towards Facebook instead. He explained that he wanted bridges to be built between the two networks so the apps \u201cincreasingly function as a single network in more respects.\u201d<\/p>\n As one example, Zuckerberg pointed out that it should be easier for video creators with large audiences to engage across both apps more easily. Plus, he wanted to combine the voice and video calling networks across WhatsApp, Messenger, and Instagram to become a single network. (Meta eventually introduced<\/a> cross-platform messaging in 2020, before rolling it back years later<\/a>.)<\/p>\n Notably, Zuckerberg also called out the difficulties of building new products and services within Instagram and WhatsApp because of \u201ctheir founder leadership.\u201d <\/p>\n He lamented that management couldn\u2019t openly discuss its concerns about Instagram in particular, as it might demoralize the team and prevent the company from retaining Instagram co-founders Kevin Systrom and Mike Krieger.<\/p>\n He also pushed for the company to rethink its branding of products, so that Facebook\u2019s brand remained front and center.<\/p>\n \u201cWhen you open those apps, it would say \u2018Instagram by Facebook\u2019 and \u2018WhatsApp by Facebook,\u2019\u201d Zuckerberg proposed in his email. \u201cWe may even need to put Facebook branding in the chrome of those apps where the app names and logos are today to cement this relationship in people\u2019s minds.\u201d<\/p>\n Zuckerberg pushed for Meta to rethink its branding so that Facebook remained front and center.<\/p>\n In 2021, Facebook instead rebranded as Meta<\/a>, whose logo now appears across all the company\u2019s apps.<\/p>\n If the FTC wins its case, Meta may have to spin out Instagram and WhatsApp as separate businesses. Ironically, that\u2019s something Zuckerberg himself suggested in his 2018 email as an alternative strategy \u2014 and possibly the \u201conly structure\u201d to accomplish the company\u2019s goals. Spinning out Instagram could preserve Facebook\u2019s growth, focus Meta\u2019s teams, and allow the company to retain Systrom, wrote Zuckerberg. (Instagram\u2019s founders left later that same year, in September 2018<\/a>.)<\/p>\n Ultimately, Meta chose not to spin out its acquisitions. But Zuckerberg had warned the other execs in the email that there\u2019s a \u201cnon-trivial chance\u201d that Meta could be forced to spin out Instagram and WhatsApp in the next 5 to 10 years, making all its work building a family of apps \u201csomething we don\u2019t get to keep.\u201d<\/p>\n If the FTC succeeds in court, Zuckerberg will be proven right.<\/p>\n Meta downplayed the magnitude of these emails in a statement shared with TechCrunch. <\/p>\n \u201cOut-of-context and years-old documents about acquisitions that were reviewed by the FTC more than a decade ago will not obscure the realities of the competition we face or overcome the FTC\u2019s weak case,\u201d a Meta spokesperson said. <\/p>\n<\/div>\nInstagram hurt Facebook\u2019s growth<\/h2>\n
Family of apps strategy versus a spin-out<\/h2>\n
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