Kevin Systrom, co-founder of Instagram, provided testimony in Washington on Tuesday, asserting that the social media platform could have thrived independently, without the backing of Meta Platforms Inc. He indicated that Mark Zuckerberg, CEO of Meta, eventually perceived Instagram’s growth as a “threat” and allocated limited resources to it following the acquisition.
These statements may strengthen the US government’s case against Meta, as attorneys from the Federal Trade Commission (FTC) aim to reverse the 2012 deal that brought Instagram under the Meta umbrella. Today, Instagram boasts nearly three billion users globally and is projected to contribute approximately half of Meta’s advertising revenue in the US this fiscal year.
During his testimony, Systrom highlighted Instagram’s remarkable growth trajectory prior to Zuckerberg’s acquisition offer. He recounted, “The users, they just kept coming,” in response to questioning from FTC attorney Bob Zuver. A government exhibit revealed that Instagram’s registered users surged 13 times in 2011, the year preceding the acquisition.
Systrom expressed confidence that Instagram could have introduced key features, such as video support and private messaging, even without the acquisition. He noted that the company did not require infrastructure assistance, as it relied on Amazon Web Services for operations, and believed it could effectively tackle issues like spam independently.
Although Systrom stayed with Instagram post-acquisition, he characterized Zuckerberg’s attitude towards the photo-sharing platform as inconsistent. He noted that Zuckerberg eventually perceived Instagram as a competitor to Facebook and pointed out that he frequently lacked resources for initiatives central to the app’s growth, including those focused on video content and data privacy, particularly after the Cambridge Analytica privacy scandal.
“I felt that was inappropriate considering Instagram’s scale,” Systrom remarked.
During the trial, federal lawyers presented emails from Systrom expressing frustration about a lack of investment in Instagram. In communication to former Chief Technology Officer Mike Schroepfer, he highlighted that “we also have areas that are ‘starving’” for funding. Furthermore, in a 2017 email to Instagram leaders, Systrom voiced concerns over the absence of additional staff despite significant investment aimed at enhancing the company’s video capabilities.
“We received none of the 300 additional video staff, which was an unacceptable outcome,” he wrote.
Systrom acknowledged that while competition for resources is commonplace within organizations, he found it particularly disheartening given Instagram’s substantial contribution to Meta’s revenue and growth.
“I was putting immense effort into the company but not receiving the necessary support,” he said. “The contrast between my efforts and the resources allocated was stark.”
Nonetheless, he acknowledged that the resources provided by Meta played a crucial role in Instagram’s impressive growth. “Yes, they gave us many resources that allowed us to thrive,” he conceded.
The FTC’s legal team is attempting to demonstrate that Meta’s acquisitions of Instagram in 2012 and WhatsApp in 2014 created an unlawful monopoly in social networking. The agency is urging US District Judge James Boasberg to nullify these transactions. After agreeing to sell Instagram for $1 billion, Systrom continued to manage the platform within Facebook until 2018.
Government officials are aiming to illustrate that Instagram was a rising competitor to Meta that could have posed a serious challenge had it remained independent. Throughout the initial week of the trial, the FTC presented numerous internal communications from Zuckerberg and other executives expressing concerns over Instagram’s rapid expansion and superior features. They are also seeking to demonstrate that Meta’s acquisition of Instagram resulted in user harm through increased advertising and compromised safety and security.
In contrast, Meta contends that Instagram’s tremendous success can be largely attributed to the support extended to the platform following its acquisition. Legal representatives from the company emphasized various forms of assistance, such as recruitment and remuneration, enhancements to the advertising system, and promotional efforts utilizing Facebook. An attorney for Meta noted that when acquired, Instagram had approximately 30 million registered users, whereas it now exceeds 2.8 billion monthly users.
“At the time of acquisition, Instagram had just two percent of its current user base, only 13 employees, no revenue, and minimal infrastructure,” Meta General Counsel Jennifer Newstead stated in a blog post prior to the trial. “Many core features of the Instagram community — including direct messaging, live video streaming, and shopping — were developed on Meta’s technology framework post-acquisition.”
Roelof Botha, an early investor in Instagram from Sequoia Capital, suggested in a video deposition played for the court that Instagram benefitted significantly from Meta’s technical resources. He observed that several competing photo-sharing applications from that era, which were also backed by Sequoia, ultimately failed.
Systrom also recognized that Facebook’s influence had previously assisted Instagram’s growth before the acquisition, with many users sharing their Instagram photos on Facebook. However, after the acquisition, Facebook disabled the option for Instagram users to share their content on other social media platforms, including Twitter.
Following the deal, Facebook drove substantial traffic to Instagram by adding tabs in its app directing users to the platform, alongside sending push notifications. An internal Meta report estimated that these initiatives resulted in an added 38 million monthly users in 2018 alone. Meta invested more than $130 million (approximately ₹1,109 crore) in advertising for Instagram during that time, both on its own platform and externally, records suggest.
Systrom noted that Zuckerberg began to withdraw much of the support for Instagram within the Facebook ecosystem, including notifications and links directing users to the photo-sharing platform, starting in 2018.
“He believed we were hindering Facebook’s growth,” Systrom commented, adding that Zuckerberg was concerned that curbing Instagram’s advancement could simultaneously mitigate Facebook’s decline. Systrom noted that he believed these alterations could potentially limit Instagram’s growth by up to 100 million new monthly users annually.
When inquired about whether Zuckerberg was ultimately satisfied with Instagram’s inclusion in Meta, Systrom described it as “a complex question.”
“He was indeed pleased to have Instagram in the family due to its rapid growth and the quality of our product work,” Systrom stated. “However, as the founder of Facebook, he also experienced emotions regarding which platform was superior — Instagram or Facebook.”
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