Mark Zuckerberg Considered Spinning Off Instagram - Details

Zuckerberg's Concerns Over Instagram Acquisition

A recently revealed internal email from Meta CEO Mark Zuckerberg, brought to light during the Meta antitrust trial, details his anxieties regarding the potential for Instagram to negatively impact Facebook’s user base.

Zuckerberg expressed concern that Instagram’s growth could lead to a decline in Facebook’s engagement and profitability, potentially resulting in a “network collapse” of the more successful platform.

Strategies to Mitigate Cannibalization

To address these concerns, Zuckerberg outlined several strategies to prevent Instagram from overshadowing Facebook. These included strengthening the integration between Meta’s applications.

He suggested a unified network approach, implying that Instagram’s rising popularity was contributing to a perceived decline in Facebook’s cultural influence.

Furthermore, Zuckerberg even considered the possibility of separating Instagram into an independent entity, operating as a distinct business from Meta.

FTC's Antitrust Case

The U.S. Federal Trade Commission (FTC) is currently building a case against Meta, arguing that the company maintains a monopoly in the social networking landscape.

The FTC contends that Meta’s acquisitions of competitors, specifically Instagram and WhatsApp, were strategic moves to solidify its market dominance.

As part of the trial, prosecutors are presenting evidence, such as internal communications, demonstrating Zuckerberg’s awareness of the competitive threat Instagram posed to Facebook, even following the acquisition.

Internal Discussions in 2018

In a May 2018 email, Zuckerberg shared his worries with key Meta executives, including Chris Cox (Chief Product Officer), Sheryl Sandberg (former COO), Mike Schroepfer (former CTO), Javier Olivan (former Chief Growth Officer, now COO), and David Wehner (former CFO).

He communicated his doubts about the company’s overall strategy concerning its suite of applications.

Zuckerberg questioned whether the existing approach to managing its family of apps was truly effective in fostering long-term growth and maintaining market leadership.

Instagram's Impact on Facebook's Expansion

Internal concerns existed regarding how Instagram’s increasing popularity might negatively affect Facebook’s own growth trajectory.

Mark Zuckerberg expressed apprehension that user adoption of Instagram correlated with a noticeable decrease in activity on the Facebook platform.

Concerns About User Engagement

Data indicated a significant decline in Facebook engagement when individuals began utilizing Instagram, a trend that intensified as Instagram’s user base expanded.

Zuckerberg highlighted a potential “hollowing out” of Facebook usage, suggesting that sustained growth for both platforms simultaneously might be unrealistic.

He cautioned that a substantial shift in user preference towards Instagram, even reaching comparable size to Facebook, could yield unfavorable consequences not currently accounted for in their projections.

The Risk of Network Decline

The core issue, as Zuckerberg framed it, was the possibility of causing a “network collapse” – substituting a more profitable and engaging platform (Facebook) with one that was comparatively less so (Instagram).

This risk was amplified by the fact that Instagram’s growth was largely fueled by its integration within the Facebook app and leveraging the existing Facebook social network.

Strategies for Mitigation

In response to these concerns, Facebook initially scaled back promotional efforts for Instagram.

A strategic shift was proposed to foster greater integration between the two platforms, aiming to create a more unified network experience.

Proposed Integrations

Zuckerberg advocated for streamlined cross-platform engagement for video creators with substantial followings.

Furthermore, he envisioned a unified communication infrastructure encompassing voice and video calling across WhatsApp, Messenger, and Instagram.

• This vision of a combined calling network was partially realized in 2020 with cross-platform messaging, though later partially reversed.

The goal was to build connections between the apps, ensuring they functioned increasingly as a single, interconnected network.

Family of Apps Strategy Compared to a Spin-Out

Mark Zuckerberg previously identified challenges in developing new features within Instagram and WhatsApp due to the influence of their original founders.

He expressed concern that openly discussing issues with Instagram could negatively impact team morale and potentially lead to the departure of co-founders Kevin Systrom and Mike Krieger.

Zuckerberg advocated for a rebranding strategy that would prominently feature the Facebook brand across all products.

His proposal included displaying “Instagram by Facebook” and “WhatsApp by Facebook” upon app launch. He even suggested integrating Facebook branding into the app’s interface itself.

The intention was to reinforce the connection between the parent company and its acquired platforms.

In 2021, Facebook underwent a rebranding to become Meta, with its logo now visible across all its applications.

Should the FTC prevail in its legal action, Meta might be compelled to separate Instagram and WhatsApp into independent entities. Interestingly, this outcome mirrors a suggestion Zuckerberg made in a 2018 email as a viable alternative.

He believed a spin-out could safeguard Facebook’s growth, streamline Meta’s teams, and potentially retain Systrom. However, Instagram’s founders ultimately left in September 2018.

Meta ultimately decided against spinning off its acquisitions.

Zuckerberg cautioned executives in the email about a “non-trivial chance” of being forced to divest Instagram and WhatsApp within 5 to 10 years. This could jeopardize the entire “family of apps” strategy.

If the FTC is successful in court, Zuckerberg’s foresight will be confirmed.

Meta minimized the significance of these emails in a statement to TechCrunch.

A Meta spokesperson asserted that these documents, reviewed by the FTC over a decade ago, would not alter the competitive landscape or invalidate the FTC’s case.