Facebook Antitrust Lawsuit: Phhhoto Alleges Copying & Killing Competition

Instagram Rival Files Antitrust Lawsuit Against Meta

A former competitor to Instagram is initiating legal action against Meta, previously known as Facebook, asserting violations of antitrust regulations.

The allegations center around Meta allegedly replicating a rival product and ultimately causing its failure.

The Rise and Fall of Phhhoto

The application, Phhhoto, debuted in 2014, enabling users to generate and distribute concise, GIF-style video clips.

This functionality gained wider recognition through Boomerang, an application developed by Instagram, and is currently integrated directly into the Instagram platform.

Lawsuit Details and Allegations

The recently submitted lawsuit contends that Facebook’s actions constituted an antitrust violation.

Specifically, it alleges the company restricted Phhhoto’s access to its social network, delayed a potential partnership, and subsequently released a duplicate of Phhhoto’s central feature – short, looping videos.

Legal Representation and Historical Context

Gary Reback, a Menlo Park-based attorney, will be representing Phhhoto in this legal battle.

Reback is renowned for his role in the federal government’s antitrust case against Microsoft, which, while not resulting in a company split, compelled Microsoft to modify certain aspects of its business practices – changes that continue to impact the technology sector.

The Detrimental Effects of Tech Company Acquisitions

Reback posits that Phhhoto’s experience underscores the potential harm caused when a dominant technology firm acquires competitors and subsequently manages those businesses.

He stated that Facebook had the opportunity to collaborate with Phhhoto and foster a competitive social network.

Facebook’s Interest in Phhhoto

Phhhoto experienced significant growth following its launch, reaching 3.7 million monthly active users at its peak.

This success attracted the attention of Facebook executives, including Mark Zuckerberg himself.

Zuckerberg’s Personal Use of the App

The lawsuit details that on August 8, 2014, Zuckerberg downloaded and installed Phhhoto on his phone.

He then created an account and uploaded a profile picture, as evidenced in the lawsuit.

Initial Partnership Discussions and Subsequent Actions

Instagram co-founder Kevin Systrom also explored Phhhoto’s features.

The lawsuit claims Facebook initially pursued a partnership with Phhhoto, but later abandoned those discussions.

Following the failed partnership, Facebook allegedly took steps to undermine Phhhoto, including removing pre-populated Instagram hashtags that indicated content originated from the app.

Furthermore, Instagram severed Phhhoto’s connection to its social graph, preventing users from connecting with their Instagram contacts within the app.

The Launch of Boomerang and its Similarity to Phhhoto

A pivotal moment occurred on October 22, 2015, when Instagram launched Boomerang, coinciding with Phhhoto’s planned Android app release.

The lawsuit identifies John Barnett, Boomerang’s product manager, as a frequent Phhhoto user.

TechCrunch observed that Boomerang bore a “suspiciously similar” resemblance to Phhhoto at the time of its launch.

Allegations of Anticompetitive Behavior

The suit asserts that Boomerang was the result of Facebook’s anticompetitive strategy, effectively eliminating Phhhoto through a copycat application that replicated its innovations.

Phhhoto reportedly became aware of the full extent of Facebook’s actions against competitors only after the release of internal company documents by the UK Parliament in 2018.

Phhhoto’s Public Statements

Phhhoto’s co-founder, Champ Bennett, publicly commented on Facebook’s actions in 2017.

He stated that the launch of Boomerang was “not a surprise at all,” given the observed use of Phhhoto by Instagram’s product team.

[scribd id=537444585 key=key-sYNyLLMrS7fNrk06UG1w mode=scroll]