(Bloomberg) -- Instagram co-founder Kevin Systrom testified that his fledgling photo-sharing app could have succeeded without being acquired by Meta Platforms Inc., and that eventually Chief Executive Officer Mark Zuckerberg treated Instagram’s growth as a “threat” and starved it of resources.
The claims could bolster the US government’s monopoly case against the social networking giant as it argues to unwind the 2012 acquisition.
In testimony Tuesday during Meta’s antitrust trial in Washington, Systrom recounted how quickly Instagram was growing before Zuckerberg’s offer. “The users, they just kept coming,” Systrom recalled from the stand under questioning by US Federal Trade Commission lawyer Bob Zuver. FTC lawyers displayed a chart of Instagram’s growth before the acquisition that showed registered users increased 13-fold in 2011, the year before the deal.
Systrom said that he believed Instagram was capable of launching several important features, including support for videos and private messages, even if the company hadn’t been acquired by Meta, then called Facebook Inc. He said that Instagram didn’t need infrastructure help — it used Amazon Web Services to keep the site operational — and the startup could have successfully combated spam and other harmful content as a standalone company.
“We would have been able to scale our problematic content screening fairly well,” he said. “It wasn’t rocket science.”
Systrom said that Zuckerberg was hot and cold on Instagram over the time that he worked there, and grew to view Instagram as a “threat” to his own social network, Facebook. Systrom said that Instagram rarely got the resources that he requested, including headcount for company-wide initiatives like video and integrity efforts around data privacy. Following the Cambridge Analytica privacy scandal, Systrom says Instagram got no new headcount despite a broad effort to shore up Meta’s data practices.
“I thought that that was not appropriate given the scale of Instagram,” he said.
FTC lawyers also showed emails from Systrom where he was frustrated about Meta’s investment in Instagram. In one to former Chief Technology Officer Mike Schroepfer, Systrom wrote that “we also have areas that are ‘starving’” for investment. In another email to Instagram leaders in 2017, Systrom complained that Instagram got no new headcount despite a wide investment to grow the company’s video ambitions.
“We were given zero of 300 incremental video heads, which is an unacceptable and offensive outcome,” Systrom wrote.
On the stand, Systrom acknowledged that all teams fight for resources and headcount, but that given Instagram’s role in driving revenue and growth for the company he felt offended by the lack of support. “I was working very hard for the company to make this a success and not getting resources back,” he said. “It was in stark contrast to the effort I was putting in.”
Lawyers for the FTC are seeking to prove that by purchasing Instagram in 2012, and WhatsApp in 2014, Meta created an illegal social networking monopoly, and the agency wants US District Judge James Boasberg to undo those deals. After agreeing to sell his company for $1 billion, Systrom continued to run it within Facebook until 2018.
Lawyers for the FTC have sought to establish that Instagram was an up-and-coming rival to Meta that would have been a formidable competitor had it stayed independent. During the trial’s first week, the FTC displayed dozens of internal emails from Zuckerberg and other top executives fretting over Instagram’s rapid growth and superior photo products.
Meta, meanwhile, has argued that Instagram became a massive success thanks in large part to the support it provided the photo app following the acquisition.
“When we acquired Instagram, it had about 2% of the users it has today, just 13 employees, no revenue, and virtually no infrastructure of its own,” Meta’s General Counsel Jennifer Newstead wrote in a blog post earlier this month before the trial started. “Many of the features that are now central to the Instagram community – direct messaging, live video streaming, shopping, and stories – were built on Meta’s core technology infrastructure after the acquisition.”
Roelof Botha, an early Instagram investor from Sequoia Capital, suggested during a video deposition that was played Monday in court that Instagram benefited from Meta’s data centers and other technical infrastructure. He pointed out that several other photo-sharing apps from that time — including a few that Sequoia also invested in — ultimately failed.
On the stand Tuesday, Systrom also acknowledged that Facebook was a helpful tool in helping the app grow before the acquisition since many users also posted their Instagram photos to their Facebook account. At the time, Instagram users were also encouraged to share their photos to other social networks, including Twitter — an option that shut off shortly after the acquisition.
Meta’s lawyers will have a chance to cross-examine Systrom after the FTC is finished.
Systrom said that Zuckerberg eventually shut off certain support for Instagram inside the Facebook app — things like notifications that would send people to Instagram. “He believed we were hurting Facebook’s growth,” Systrom said, adding that Zuckerberg believed that slowing Instagram’s growth would simultaneously slow Facebook’s decline.
When asked whether Zuckerberg was ultimately happy to have Instagram as part of the company, Systrom said it was “a complex question.”
“He was always very happy to have Instagram in the family because it was growing so quickly and we did great product work,” Systrom said. “But also I think as the founder of Facebook he felt a lot of emotion around which one was better, meaning Instagram or Facebook.”
(Updates with Zuckerberg feeling threatened in final paragraph.)
