Updated July 30th, 2020 at 08:53 IST
‘Instagram can hurt us’: Shocking emails reveal how Zuckerberg neutralised a competitor
Anti-trust panel revealed email conversations between Zuckerberg and Facebook's CFO David Ebersman, that show the former was trying to buy out his competition
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CEOs of four tech giants Facebook’s Mark Zuckerberg, Amazon’s Jeff Bezos, Google's Sundar Pichai, and Apple's Tim Cook were summoned on Wednesday with regards to the organisations' malpractices on Competition and Antitrust Laws. These summons come after the accusations on these companies of becoming powerful by gobbling up scores of rivals, stifling competition and innovation, and raising prices for consumers.
As the CEOs were called to virtually testify regarding their “abuse of monopoly power” and anti-competition practices, the committee revealed 2012 conversations between Zuckerberg and his CFO David Ebersman before they decided to acquire Instagram. The conversations pointed out that Facebook bought Instagram to eliminate competition in the future.
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Digging out old graves
In a 2012 email conversation between Zuckerberg and the company's chief financial officer, David Ebersman, the Facebook CEO floated the idea of buying smaller platforms such as Instagram or Path as he thought "if they grow to a large scale they could be very disruptive" to Facebook. Reportedly, the discussion between the two hinted at buying Instagram for reasons such as "neutralizing a competitor, acquiring talent, integrating products to improve the Facebook service". Zuckerberg opined that social products, once successful, have a network of users around itself and it becomes difficult to replace them without doing something different.
“These businesses are nascent but the networks established, the brands are already meaningful, and if they grow to a large scale the could be very disruptive to us,” Zuckerberg wrote in his email, as reported by an American technology news website.
He further wrote, “Given that we think our own valuation is fairly aggressive and that we’re vulnerable in mobile, I’m curious if we should consider going after one or two of them. What do you think?”
After the conversation, Zuckerberg wrote in a clarification that he doesn't intend to buy Instagram to prevent competition.
“I didn’t mean to imply that we’d be buying them to prevent them from competing with us in any way,” he wrote.
The emails were revealed during the House antitrust subcommittee’s hearing. The Committee argued on the basis of the emails and several other messages and documents from 2012, that Facebook or Zuckerberg in specific, wanted to acquire Instagram to avoid competition.
“Facebook, by its own admission ... saw Instagram as a threat that could potentially siphon business away from Facebook,” Representative Jerry Nadler (D-NY) said during the hearing about the Instagram acquisition.
“So rather than compete with it, Facebook bought it. This is exactly the type of anti-competitive acquisition the antitrust laws were designed to prevent," Nadler opined.
The committee opined that the clarification Zuckerberg gave after his email conversation of acquiring Instagram, itself acts as an evidence that Zuckerberg knew he had revealed too much, and hence his clarification was a calculated walk back to avoid scrutiny in the future, the committee argued.
According to Tom Warren, the editor of The Verge, Zuckerberg faced the most number of questions i.e. 62 questions, followed by Sundar Pichai with 61 questions. Jeff Bezos was asked 59 questions while Apple's Tim Cook had to face the least number of questions, 35.
Google, Amazon, and Facebook CEOs faced around 60 questions each. Apple CEO Tim Cook only faced 35 questions, avoiding bigger Qs over its App Store policies (tally via @Kellen_Browning) https://t.co/u889f50IWY pic.twitter.com/3zfi5VoQ1L
— Tom Warren (@tomwarren) July 29, 2020
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Published July 30th, 2020 at 08:53 IST
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