Founder Sues Instagram over Mark Zuckerberg’s Perilous Perception of the Platform as a Threat to Facebook’s Growth

Aside from considering Google’s relief measures, this week also saw an investigation into Meta’s social networking business. In the second week of proceedings, Kevin Systrom, the co-founder of Instagram, provided testimony in court. Instagram is a key focal point in determining whether Meta engages in anti-competitive behavior within the realm of social networking. The Federal Trade Commission (FTC) has presented evidence indicating that Facebook acquired Instagram to stifle the potential growth of a platform that could rival Facebook.

Systrom testified that Mark Zuckerberg decided to purchase Instagram because he believed it posed a obstacle to Facebook’s growth, marking Systrom’s first public stance on the matter since he and Mike Krieger, another co-founder, left Instagram in 2018 (Facebook acquired Instagram in 2012). He stated that their decision to depart Meta/Instagram was due to Zuckerberg not valuing the platform. At the time, Instagram had around 1 billion users, accounting for 40% of Facebook’s user base, yet the company only had 1,000 employees compared to Facebook’s 35,000. Instagram was the fastest-growing team with high revenue growth potential.

When asked by the FTC attorney why Zuckerberg didn’t increase investments despite promising directions, Systrom believes it was Zuckerberg’s personal bias fearing Instagram could surpass Facebook, a platform he had created. Zuckerberg often made comparisons between the two platforms. Meta’s lawyers highlighted that Instagram heavily relied on resources from Facebook post-merger, such as the sales team, resulting in significant revenue growth compared to its independent status, a point that Systrom acknowledged.

In the negotiation of Instagram’s acquisition by Mark Zuckerberg, Systrom revealed that he had once proposed selling Instagram for up to $4 billion, a significantly high offer at that time (eventually settling at $1 billion).

TLDR:
Kevin Systrom’s court testimony shed light on the dynamics behind Meta’s acquisition of Instagram, revealing strategic motivations and personal biases that influenced the deal.