Document Shows Facebook Bought Instagram To Slash Competitor

by StartupWorld Staff         

Earlier Facebook Inc. CEO Mark Zuckerberg signed a deal of the Instagram acquisition. He suggested the idea to the photo-sharing startup’s co-founder Kevin Systrom, who was not concerned. 

To this deal, Kevin Systrom asked a board member that if he says, then will Mark go into destroy mode? The early Facebook employee and venture capitalist, Matt Cohler, replied that probably. Possibly Facebook would anyways go into destroy mode, Cohler added.

The exchange was one of various potentially damaging pieces of evidence in documents acquired by the US House Judiciary subcommittee on antitrust, showing that Mark Zuckerberg pulled Facebook’s on competitors’ market power and bought Instagram due to the concerned on the fast-growing company’s power to get users away from Facebook.

In 2012, Instagram was purchased for $715 million. It was precisely the anticompetitive acquisition type intended to prevent antitrust laws, at a hearing, representative Jerrold Nadler told Mark Zuckerberg. The Federal Trade Commission allowed Instagram acquisition after Mark’s reminder to committee members. Over this, the representative David Cicilline said that the FTC’s failure in 2012 had no aptitude for whether the acquisition violated the law.

Document Shows Facebook Bought Instagram To Slash Competitor

Mark Zuckerberg didn’t deny that his firm had acquired Instagram in part, so it would not stand with Facebook on photo sharing. He also mentioned that the messaging platform WhatsApp, which he bought in 2014, was also among its competition. The documentary evidence has given Mark a choice. 

According to the 2012 emails exchanged with Facebook’s CFO, Mark wanted to make the Instagram acquisition to buy time -- one or more years to integrate Instagram’s features so Facebook would be on top and running with photo-sharing before any other platform could reach the same scale.

At one point, Mark also told Kevin Systrom that Facebook was developing a copycat application titled Facebook Camera. Over this, representative Pramila Jayapal also asked Mark Zuckerberg if he ever threatened Instagram or other competitor platforms with the same features. On this, Mark Zuckerberg said he would never consider such conversations to be a threat.

At the time of Facebook’s purchase Instagram, the photo-sharing app only had 13 employees and had no revenue at the time. However, Instagram was already becoming famous at a dramatic clip, overtaking other photo-sharing apps with the same size of its network. Later 6 years being a part of Facebook, Instagram overtakes 1 billion users. Presently, Instagram contributes over $20 billion to Facebook’s annual revenue. Mark is still concerned about the power for Instagram to break apart Facebook’s growth, and obstruct its resources and working on integrating it more firmly with the major social network.

Facebook’s acquisition of Instagram was mainly because of the perception that Instagram was independently operating within Facebook. Because of Instagram’s success, Facebook was able to convince WhatsApp in 2014 to join Facebook for $22 billion.

To the representatives, Mark Zuckerberg told WhatsApp was also both a complementary and competitor of Facebook. WhatsApp competed with Facebook in the social messaging sector, which is an important space.


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