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Eight years later, Mark Zuckerberg faces political wrath for buying Instagram

Facebook at Congressional hearing: Representative Jerrold Nadler asked if the merger was illegal at the time of the transaction, why Instagram should not be broken off into a separate company now

twitter-logoBusinessToday.In | July 30, 2020 | Updated 18:19 IST
Eight years later, Mark Zuckerberg faces political wrath for buying Instagram 
Facebook's Instagram acquisition questioned by Congress

Instagram's acquisition by Facebook was condemned at the Congressional hearing on Wednesday. CEO Mark Zuckerberg took a bunch of questions on the company's acquisition of the photo-sharing app in 2012. He was asked if Instagram was acquired because it posed a threat to Facebook.

Zuckerberg responded that the deal was reviewed by the Federal Trade Commission and at the time of acquisition Instagram was a small photo-sharing app rather than a social-media phenomenon.

However, the panel furnished company emails and numerous screenshots of correspondence from Zuckerberg and other Facebook executives. "The businesses are nascent but...if they grow to a large scale they could be very disruptive to us," Zuckerberg had said two months before acquiring Instagram. He had conceded that Instagram was a threat in an email and had said, "One thing about startups though is you can often acquire them."

Representative Jerrold Nadler asked if the merger was illegal at the time of the transaction, why Instagram should not be broken off into a separate company now. Zuckerberg responded that the acquisition of the photo-sharing app was to build its infrastructure and security as it experienced rapid growth.

"This is exactly the type of anticompetitive acquisition the antitrust laws were designed to prevent, and this should never have happened in the first place, it should never have been permitted to happen, it cannot happen again," said Nadler, as mentioned in The Guardian.

Representative Joe Neguse showed a 2014 email where Facebook CFO referred to company acquisition strategy as "land grab". "We have a name for this; it is monopoly," Neguse said.

In a separate exchange, Representative Pramila Jayapal asked Zuckerberg whether Facebook has ever copied its competitors. Zuckerberg said that the company has certainly "adapted features". "How many companies did Facebook end up copying? Is it less than five? Less than 50?" she asked. "Congresswoman, I don't know," Zuckerberg said.

During the questioning, Zuckerberg also went after Apple, Google and Amazon. "In many areas, we are behind our competitors. The most popular messaging service in the U.S. is iMessage. The fastest growing app is TikTok. The most popular app for video is YouTube. The fastest growing ads platform is Amazon. The largest ads platform is Google. And for every dollar spent on advertising in the US, less than 10 cents is spent with us," he said during one exchange.

Also read: Bezos, Cook, Pichai, Zuckerberg face the heat! Time to answer tough questions

Also read: 'Does Google steal content from honest businesses?' Sundar Pichai asked at Congress hearing

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