Jul 30, 2020 12:10:00

A document showing that Facebook's Instagram acquisition was aimed at 'incapacitating competitors' is exposed

by

Alessio Jacona

At the hearing held by the Antitrust Subcommittee of the United States House of Justice on July 29, 2020, the contents of Facebook's CEO Mark Zuckerberg and executives were e-mailed. The material reveals that CEO Zuckerberg decided to acquire Instagram 'because he considered Instagram a potential competitor.'

'Instagram can hurt us': Mark Zuckerberg emails outline plan to neutralize competitors-The Verge
https://www.theverge.com/2020/7/29/21345723/facebook-instagram-documents-emails-mark-zuckerberg-kevin-systrom-hearing

Zuckerberg Testimony: Facebook Instagram Deal to Quash Competitor-Bloomberg
https://www.bloomberg.com/news/articles/2020-07-29/documents-show-facebook-bought-instagram-to-quash-competitor

The photo sharing SNS “Instagram” that started in 2010 gained 10 million users within a year of the release of the application, and the number of users has expanded to 30 million in the latter half of the year. It was. And in April 2012, it will be put under Facebook's umbrella by a huge acquisition of 1 billion dollars (about 105 billion yen) as a startup.

The Antitrust Subcommittee, which had been investigating violations of monopoly law by major IT companies for a long time, summoned the CEOs of Google, Apple, Facebook, and Amazon that compose GAFA at the hearing on July 29, and gave testimony. I asked. Among them, the Antitrust Subcommittee told Zuckerberg, who attended the hearing in the form of a video conference, 'With multiple records and documents of Facebook, Facebook, originally Zuckerberg, acquired Instagram to avoid competition. Has been shown.” The following multiple materials were presented as evidence.

The following is the text of an email sent by Zuckerberg in 2012 to the then Chief Financial Officer (CFO), David Ebersman . Among them, Zuckerberg said, keeping in mind that social media such as Instagram and Path are rapidly growing, ``Their business is just beginning, but the network is established, the brand has already been pushed. If they grow into a big company, it could have a devastating effect on us,' he said. We have announced plans to acquire services such as Instagram.

On the other hand, Mr. Ebersman said, 'In my experience, most of the

M & A acquisitions have not been able to generate the value that the acquirer expects', but the reason for the acquisition is 'potential. We gave Zuckerberg's true intentions by exemplifying four of the following: “neutralizing strong competitors,” “obtaining talented people,” “enhancing Facebook services through service integration,” and “others.”

In response to Mr. Ebersman's question, CEO Zuckerberg said it was due to 'disabling potential competitors' and 'integration of services.' 'The basic plan is to acquire these companies, keep their services alive, and, over time, integrate the social dynamics they invented into our core business,' he said. ..

Approximately one hour after sending the above email, CEO Zuckerberg evaded an email arguing that 'the email just mentioned does not mean that they intend to acquire it to prevent them from competing with us.' I am sending it to Mr. Suman.

“We saw Instagram as a potential threat to our business,” said Jerold Nadler, the Justice Chairman of the exchange, and said Facebook would buy Instagram instead of competing with it. We chose it, which is a good example of a very anti-competitive acquisition, and antitrust laws were enacted to prevent this,' he accused Facebook.

In response to Mr. Nadler's question, Zuckerberg said, 'In addition to Instagram, companies like Path, VSCO Cam and PicPlz were competitors at that time.' 'Because they became a member of our company, They have transformed from competitors in the field of mobile photo sharing into apps that help us grow and reach more people.”

``The evidence gave the Zuckerberg little choice,'' said Bloomberg, citing Zuckerberg's response, which did not explicitly deny the acquisition to prevent competition. ..

Meanwhile, Zuckerberg said in an answer: 'Facebook is behind many competitors in many areas. America's most popular messaging service is Apple's iMessage, and the most popular video sharing service is Google. YouTube is the fastest growing app, TikTok is the fastest growing advertising platform, Amazon is the fastest growing advertising platform, and Google is the largest advertising platform,' Facebook said at the hearing today. He stressed that GAFA is not a threat to market competition compared to other companies.