The Federal Trade Commission secretly interviewed Mark Zuckerberg while probing Facebook’s 2012 acquisition of Instagram — grilling the tech tycoon over the social network’s motives in the controversial deal, two sources with direct knowledge of the situation told The Post.
Facebook’s chief executive had agreed voluntarily to speak with the feds in the 2012 interview, which hasn’t previously been reported, according to sources close to the situation. Despite regulators’ concerns over the tie-up, Zuckerberg wasn’t formally deposed and the FTC dropped its case roughly three months later.
The fact that the interview took place could throw a wrench into the new antitrust case brought against Facebook by hard-charging FTC Chair Lina Khan, who is looking to unwind the tech giant’s acquisitions of Instagram and WhatsApp, legal experts say. That’s because it bolsters the argument that the feds already thoroughly reviewed the tie-up when it was proposed, and are now improperly trying to relitigate the case.
In the interview, sources said Zuckerberg denied that he had viewed Instagram as a competitor — a crucial point as regulators reviewed concerns that Facebook was building a monopoly in the social-networking space. Instead, Zuckerberg insisted in the interview that he wanted to buy Instagram to help Facebook fetch a better valuation in its initial public offering, which was to occur three months later, sources said.
That’s despite explosive internal messages that the feds had seized prior to the interview and used to confront Zuckerberg, the sources said. The messages eventually spilled into public view during a 2019 congressional hearing on tech antitrust concerns.
The Federal Trade Commission secretly interviewed Mark Zuckerberg while probing Facebook’s 2012 acquisition of Instagram — grilling the tech tycoon over the social network’s motives in the controversial deal, two sources with direct knowledge of the
In one of the 2012 messages, then-Facebook CFO David Ebersman asked Zuckerberg whether the potential purchase of Instagram was about neutralizing a competitor, acquiring talent or integrating products to improve Facebook.
“It’s a combination of neutralizing a competitor and improving Facebook”, Zuckerberg replied.
Sources said Zuckerberg defended the February 2012 internal communications in the FTC interview, saying they needed to be placed in a broader context. At the time, Facebook was preparing for an IPO, which happened in May 2012. Zuckerberg said he believed buying Instagram might help Facebook’s IPO valuation and that is what he meant. Likewise, he denied that he viewed Instagram as a real competitor to Facebook, noting that the company wasn’t much bigger than several other, lesser-known photo-sharing apps at the time, the source said
“This was his spin,” at the time, the source said.
“I don’t think he said anything to help himself,” the second source with direct knowledge of the interview said. “If this interview and the texts were public in 2012, there would have been more pressure to block the merger.”
Nevertheless, after interviewing Zuckerberg, the FTC decided against bringing him back to answer more questions in a formal deposition, according to sources.
“I think there was a lot of reticence to produce him as a formal witness,” the first source said. “The FTC tried to work around it because they did not want to depose him.”
In the interview, sources said Zuckerberg denied that he had viewed Instagram as a competitor — a crucial point as regulators reviewed concerns that Facebook was building a monopoly in the social-networking space. Photo by Thomas Trutschel/Photothek
Zuckerberg did not want to appear under oath, and regulators do not like bringing in the CEO of a large company multiple times for interviews unless they believe they might actually sue, the source said. In the end, the FTC regulators weren’t convinced they had a winning case, the source added.
That’s partly because Instagram at the time had no revenue, crippling the FTC’s ability to build an argument that the merger was anticompetitive under US antitrust law. Indeed, most of the FTC’s five commissioners were concerned they wouldn’t win if they sued to stop the merger because of antitrust rules that equate market share with revenue, sources said.
Facebook wouldn’t comment for this story, but earlier this month said in a statement: “The FTC’s claims are an effort to rewrite antitrust laws and upend settled expectations of merger review, declaring to the business community that no sale is ever final. ” The FTC didn’t return calls for comment.
The Post reported exclusively in 2019 that then-FTC Chair Jon Leibowitz was interested in blocking the merger but could not get enough support among the other commissioners. Facebook, which had already accumulated a 60 percent share of the social network market, pushed the deal through in August 2012 — just four months after it announced it — partly by arguing that Instagram was a photo-sharing site for smartphones, not a social-networking site.
Now, some experts say the FTC likely will have a hard time persuading a DC District Court judge to unwind the nearly 10-year-old deal despite claims that it helped kill off competition and allowed Facebook to become too dominant.
“That’s very provocative,” George Washington University Law Professor William Kovacic, who chaired the FTC in 2008 and 2009 told The Post when told of the secret Zuckerberg interview, saying he had been unaware it had taken place. “This sure doesn’t help the Commission’s case.”
Earlier this month, FTC Commissioner Christine Wilson voted against filing the amended complaint, noting in her dissenting opinion, “The primary allegations … relate to Facebook’s acquisitions of Instagram and WhatsApp, transactions that the FTC previously evaluated.”
“I believe it is bad policy to undermine the integrity of the premerger notification process established by Congress and the repose that it provides to merging parties that have faithfully complied with its requirements,” Wilson wrote.
If the FTC uncovered new information about what Facebook was thinking in 2012 that regulators didn’t know at the time, it could make the case to unwind the merger easier to make, sources said.
The first source with direct knowledge of the 2012 Zuckerberg interview estimated that the government has a 25 percent chance of winning its case against Facebook, even as Facebook argues not only that it cooperated with the FTC in 2012 but also that Instagram would have never become this successful on its own.
Regulators’ best chance of winning, according to the source, is showing that the facts have changed since the merger as Instagram has become a giant social-networking site and was not in the social-networking space 10 years ago.
“If the facts change, you appraise a merger at time of the suit and not when the merger occurs,” Penn Law Professor Herbert Hovenkamp told The Post.
He said the FTC’s new chair Kahn — a 32-year-old former Colubmia Law professor who has cast herself as a firebrand on antitrust issues — is likely partly pursuing the suit, brought initially by Trump-appointed regulators, because she could win even by losing.
“She gets two bites at the apple,” Hovenkamp said. “One is to win — and if it falls apart, she still has a chance to win if Congress passes one of the more aggressive bills that changes merger law. She can make her case to Congress that the FTC would have sued to stop the Instagram merger had the antitrust laws been updated to give it more power.”
Facebook-Meta Earns the ‘Worst Company of 2021’ Title in This Survey
Facebook parent Meta has been named the Worst Company of the Year (2021) by Yahoo Finance respondents. According to the publication, an “open-ended” survey was published on Yahoo Finance on December 4 and 5, where 1,541 respondents participated. Facebook received 8 percent of the write-in vote, but respondents were seemingly mad about the Robinhood trading app as well. Electric truck startup Nikola, which was named last year’s worst company by the same publication also faced respondents ire.
Yahoo Finance even highlights, “At the same time, some critics, including conservatives, say Facebook over-policed the platform’s speech and stifled their voices.” Critics also blame Facebook and other social media platforms for not curbing hate speech that led to Capitol Building riots.
However, around 30 percent of Yahoo Finance readers said that Facebook or Meta could redeem itself. One respondent suggested that the company could issue a formal apology for negligence and donate a sizable amount of its profits to a foundation to help reverse its harm.
On the other hand, respondents chose Microsoft as the Company of the Year (2021). The Satya Nadella-led company touched the trillion-mark this year and introduced notable upgrades. The most notable is the Windows 11 OS update that succeeds Windows 10.
Facebook pays 1.7 Cr fine to Russia after failing to delete content Moscow deems illegal
In the latest legal tussle with Russia over controversial social media regulation laws, Facebook paid 17 million roubles (Rs 1.7 Crore) for failing to remove content deemed illegal by Moscow. With a threat of potential larger fines looming, Facebook parent company Meta, owned by Mark Zuckerberg, is scheduled to face court next week over repeated violations of Russian legislation on content, Interfax News Agency reported. As per the latest updates, the social media giant could be fined a percentage of its annual revenue.
In October, Moscow sent state bailiffs to enforce the collection of 17 million roubles. Meanwhile, as per Interfax report citing a federal bailiffs’ database, on Sunday, there were more enforcement proceedings against the company. Apart from the popular social media app, Telegram has also paid 15 million roubles in fines for failing to comply with the Russian social media legislations that came into force in 2016.
Facebook pays $53k to Russia for refusing controversial social media laws
It is pertinent to mention that Facebook has locked horns with Moscow earlier in November, resulting in it paying 4 million roubles ($53,000) over its refusal to adhere to Russian data localisation laws, the Moscow Times reported. The Moscow court on November 25 had said that Facebook paid the fine levied in February, following which all proceedings against the US-based social media giant. The payment comes against the litigation filed against the company in 2018, alongside Twitter. The tech companies were also forced to pay an additional 3000 rubles ($40) for failing to comply with user data sharing rules as per the law. The Russian authorities have also previously blocked LinkedIn, owned by Microsoft, for failing to abide by the laws.
Russian social media laws
As per Moscow Times, under the Russian social media regulation laws, all foreign technology companies are required to store data related to Russian customers and users on servers located in Russia. Additionally, the Russian tech companies will also have to share encryption data with the federal authorities as well as record user calls, messages and civil society group conversation records. The apparatus is said to be a severe breach of privacy rights and unfettered back-door access to personal data that could be used to harass Kremlin critics.
Facebook Messenger Is Launching a Split Payments Feature for Users to Quickly Share Expenses
Meta has announced the arrival of a new Split Payments feature in Facebook Messenger. This feature, as the name suggests, will let you calculate and split expenses with others right from Facebook Messenger. This feature essentially looks to bring an easier method to share the cost of bills and expenses — for example, splitting a dinner bill with friends. Using this new Split Payment feature, Facebook Messenger users will be able to split bills evenly or modify the contribution for each individual, including their own.
The company took to its blog post to announce the new Split Payment feature in Facebook Messenger. 9to5Mac reports that this new bill splitting feature is still in beta and will be exclusive to US users at first. The rollout will begin early next week. As mentioned, it will help users share the cost of bills, expenses, and payments. This feature is especially useful for those who share an apartment and need to split the monthly rent and other expenses with their mates. It could also come handy at a group dinner with many people.
With Split Payments, users can add the number of people the expense needs to be divided with and, by default, the amount entered will be divided in equal parts. A user can also modify each person’s contribution including their own. To use Split Payments, click the Get Started button in a group chat or the Payments Hub in Messenger. Users can modify the contribution in the Split Payments option and send a notification to all the users who need to make payments. After entering a personalised message and confirming your Facebook Pay details, the request will be sent and viewable in the group chat thread.
Once someone has made the payment, you can mark their transaction as ‘completed’. The Split Payment feature will automatically take into account your share as well and calculate the amount owed accordingly.
Tasneem Akolawala is a Senior Reporter for Gadgets 360. Her reporting expertise encompasses smartphones, wearables, apps, social media, and the overall tech industry. She reports out of Mumbai, and also writes about the ups and downs in the Indian telecom sector. Tasneem can be reached on Twitter at @MuteRiot, and leads, tips, and releases can be sent to firstname.lastname@example.org.