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- The Federal Trade Commission filed a lawsuit against Facebook on Wednesday, accusing the company of buying WhatsApp and Instagram to neutralize competition instead of creating their own services to compete against them.
- Internal emails written by Facebook CEO Mark Zuckerberg were made public in the lawsuit, and the documents reveal how the executive and others in leadership perceived the two companies as threats before acquiring them.
- “It is better to buy than compete,” Zuckerberg wrote in a 2008 email, according to the lawsuit.
- The FTC lawsuit coincides with a separate suit filed by 48 attorneys general and comes as scrutiny has mounted against Facebook over alleged antitrust violations and anticompetitive business practices.
- The FTC lawsuit is seeking a spin-off of WhatsApp and Instagram from its parent company.
- Visit Business Insider’s homepage for more stories.
The Federal Trade Commission is suing Facebook over the company’s “illegal monopolization” of the market, and it’s zeroing in on the social media company’s acquisitions of mobile messaging app WhatsApp and Instagram.
The lawsuit accuses Facebook of acquiring the companies to neutralize competition instead of building out their own services to compete in the market. The suit is calling for the company to spin-off the two companies, and a separate lawsuit was filed by 48 attorneys general with similar allegations.
Read more: Wall Street pours cold water on the Facebook breakup party: ‘The courts won’t buy this.’
The lawsuit, filed Wednesday, includes internal emails written by CEO Mark Zuckerberg and others in leadership, documents that were made public for the first time. The newly-uncovered messages show how Facebook perceived Instagram and WhatsApp to be threats to the company before it acquired them.
As Zuckerberg said in a 2008 email, according to the lawsuit, “it is better to buy than compete.”
Zuckerberg said in September 2011 that Facebook was lagging behind Instagram in mobile photo-sharing.
"In the time it has taken us to get ou[r] act together on this[,] Instagram has become a large and viable competitor to us on mobile photos, which will increasingly be the future of photos," Zuckerberg wrote, according to the suit.
Zuckerberg noted in February 2012 that if Instagram remained a standalone competitor, or one that was acquired by Facebook rivals Google or Apple, it would put Facebook "very behind in both functionality and brand on how one of the core use cases of Facebook will evolve in the mobile world."
Zuckerberg said that would be "really scary" for Facebook, and the company "might want to consider paying a lot of money" for Instagram as a result.
Facebook eventually acquired Instagram in 2012 for $1 billion. The day the deal was announced - April 9, 2012 - Zuckerberg wrote to a colleague in a private message: "I remember your internal post about how Instagram was our threat and not Google+. You were basically right. One thing about startups though is you can often acquire them."
Some internal messages included in the lawsuit were already made public in July as part of a Congressional probe into online competition.
Zuckerberg wrote in an email to then CFO David Ebersman that buying competitors like Instagram would give the company more time to integrate their features and to stave off other emerging competitors.
"Within that time if we incorporate the social mechanics they were using, those new products won't get much traction since we'll already have their mechanics deployed at scale," Zuckerberg said.
The suit alleges that the company's acquisition of Instagram prevented the popular platform from "cannibalizing" Facebook. According to the lawsuit, some Facebook employees were "scare that we can't compete on our own merits."
Then it was WhatsApp's turn
After the Instagram deal in 2012, court documents show that Facebook's "next biggest consumer risk" was a mobile messaging competing service entering the social networking market.
Zuckerberg wrote in April 2012 that using messaging as a "springboard" to build up mobile social networks was a trend in play across the globe. Later that year, a Facebook business growth director wrote that the trend "might be the biggest threat we've ever faced as a company."
WhatsApp, according to the lawsuit, was considered the largest threat and a "category leader." Facebook acquired the company, which was largely popular outside of the US, in 2014 for $19 billion.
Following Facebook's announcement of its WhatsApp acquisition, employees called WhatsApp "probably the only company which could have grown into the next FB purely on mobile."
This isn't the first time Zuckerberg's internal emails have been used against him
A series of internal documents were made public in July as part of a congressional investigation into online market competition. Zuckerberg and his fellow tech executives at Apple, Amazon, and Google all faced questioning from lawmakers.
The emails revealed that Zuckerberg and Facebook indeed perceived Instagram as a threat to their market domination before acquiring the company.
Zuckerberg told colleagues in 2012 that Instagram "can hurt us meaningfully without becoming a huge business."