FTC v Meta Day 16: How IG Learned to Stop Worrying and Love the Zuck

Adam Mosseri, Head of Instagram, returned to court on Day 16 of the FTC v. Meta antitrust trial, and we heard more from Meta marketing head Alex Schultz.

Adam Mosseri’s testimony took up most of Day 16. Near the day’s end, Meta’s Alex Schultz returned to the stand—out of order, since his testimony started before Mosseri’s. We take each in turn.

From Met Gala to Meta Antitrust Trial

Adam Mosseri has been with Meta since 2008. He came up on the product side, working on Facebook before becoming product management director and then Vice President of product management for the Facebook News Feed. Since 2018, his title has been, simply, “Head of Instagram.”

As far as witnesses go, Mosseri is the real deal: he’s charismatic and funny, and he gives his point of view without coming across as grandstanding like other Meta witnesses. Sometimes he even said things that were unhelpful for Meta’s case. His willingness to stick to his guns even at the minor expense of the defense gave him an aura of credibility. Meta’s lawyers must recognize this, too, because they picked him over expert witnesses to deliver Meta’s tech tutorial before the start of trial.

In sum, Mosseri sounds like a real human being, and not a space reptile. That’s not to say he’s a mere mortal like the rest of us; he came to trial after attending the Met Gala in New York, riding along with Jenna Ortega and Shaboozey, among others. (Would Anna Wintour be open to renaming it the Meta Gala?) Tax the rich, indeed.

Instagram Head Adam Mosseri. Credit: Anthony Quintano from Mount Laurel, United States, CC BY 2.0, via Wikimedia Commons.

The FTC’s direct examination of Mosseri, led by trial chief Susan Musser, was focused on shoring up arguments supporting the FTC’s personal social networking services (“PSN”) market. You’ve read our explanation of the contours of this proposed antitrust market several times before, but to refresh: it’s a market of apps and websites built around sharing updates among friends and family. The apps in that market, the FTC claims, are Facebook, Instagram, Snapchat, and MeWe; defunct competitors include MySpace and Path. Meta, for its part, sees competition in a broader way, in terms of competition for user time and attention. On that score, Meta counts messaging apps (iMessage, but also Telegram, Signal, and so on) and video apps (chiefly TikTok, plus YouTube, among others) among its chief competitors.

Mosseri gave testimony that helped each side score points on market definition. Musser brought up a 2016 blog post from Mosseri on Meta’s website announcing changes to Facebook’s News Feed, when Mosseri was stationed there, designed to show “more posts from your friends and family.” As Mosseri explained then, the “driving principle” of News Feed is “connecting people with their friends and family”:

Score one point for the FTC’s theory that Facebook is about friends and family. That theme got further color from a June 2018 Mosseri email to Mark Zuckerberg, which Mosseri sent at 6:23 a.m. on a Saturday while he was out on paternity leave, referring to a conversation the two had at Zuckerberg’s home (emphasis added):

“I recognize I’m hearing things secondhand from pat leave but I wanted to clarify one thing just in case. You mentioned at your house last weekend that you thought it would be good for Instagram to try and compete with YouTube and Messenger to focus more on friend sharing and I said I could get behind that. I did not mean to suggest that I thought Instagram should focus any less on friends. If differentiating the graphs means focusing Instagram on influencers/interests and ‘not’ on friends then you should know I think that’s a mistake.”

Mosseri reiterated that final line in his testimony: “It is” a mistake to focus on influencers and not on friends. It was an admission that exemplified his willingness to stick to his guns, even if the answer Meta’s lawyers would have liked to hear was gobbledygook about how friends and family sharing doesn’t matter anymore. And that helped his credibility greatly.

To be sure, toward the end of the direct, Mosseri explained that the “most common answer” for why people use Instagram is “to be entertained.” Instagram “blend[s]” entertainment and friends and family sharing: you see content that’s interesting from someone you’re not connected to—”most of the content you consume is from accounts you do not follow,” he explained—and then you share it with friends.

This creates a “flywheel,” a concept that got fleshed out on cross-examination: “Creators produce content, people then consume that content, they then share that content with friends either on or off the platform, which leads to more consumption of content” and more creators creating content. Driving the point home, Meta flashed a demonstrative graphic of this virtuous cycle.

One line of Musser’s questioning looked at X/Twitter and Threads, Meta’s answer to X. Mosseri agreed that on Twitter, the “content you consume is from people you don’t know in real life.” Mosseri went on to explain how “conversations” are the point of Twitter and Threads, and how one of Twitter’s innovations was to make replies just as prominent as the original tweet. That’s different from how things were done on Facebook, where “comments” are subordinate to the “post” that begins a thread.

“Much More Emotional Than It Needs To Be”

The FTC also had success when the questioning returned to resource tradeoffs between Facebook and Instagram, in particular in 2018, around the time Mosseri took over responsibility for Instagram. We saw on Day 14 that Mosseri intuited that Instagram had a lot of work to do around preventing “child grooming” on the platform.

After Mosseri became Instagram’s head, Instagram made a “pivot” from “mostly building our own things” to “integrating the engineers from the rest of the company.” It was “pretty painful for seven months on that front,” and Mosseri “actually lost credibility with some people,” he said. Instagram’s team was “lean and mean, a few thousand people” at the time, which was “a lot” of people but not much in comparison to Instagram’s billion-plus user-base. This transition was twofold: Mosseri "advocate[d] heavily within Instagram for more opportunities to leverage technology from the central integrity team which was larger than the Instagram team at that point,” but he also pushed the central integrity team (focused on trust and safety) to “focus more on Instagram.”

Mosseri was more explicit in an October 2018 email. An executive had written to him contending that Instagram “mis-prioritized and under-funded our Integrity efforts” in favor of pursuing growth. Mosseri seemed to agree, using “Well-Being” or “WB,” a synonym for “Integrity”:

“Now I don’t think we’re there on Instagram. I think we’re underinvested in Well-being and . . . until recently, the resources we did have were under-leveraged . . . . Honestly I think there are a handful of teams that are woefully understaffed, and WB is one of them.”

A deck concluded the same way: “For years, Instagram did not invest in Integrity, so we were at high risk across many areas at the end of 2017.” We saw a different version of data we saw on Day 14 of trial, where Meta scored Instagram’s progress on 27 categories from 0 to 3, with 3 being the best score, reflecting that strategies to address a risk area were “operational.” Instagram had flunked these measures in the first half of 2017, earning a 0 in 22 of 27 categories.

Another email exchange between Mosseri and Zuckerberg, from before Systrom left Meta in 2018, saw Mosseri explicitly charge Zuckerberg with “handicapping” Instagram (emphasis added):

“The number one priority is turning [Facebook] Blue around. The core tension seems to be twofold: (1) you believe slowing down Instagram will help more than some others do, and (2) your tolerance for handicapping Instagram is expectedly higher than the Instagram team’s. My question is are you pushing for Instagram to be public content first, friend content second? Or a smaller shift? If it’s the former I think we risk breaking some of the core assets we have to bring people together—IG Stories and Direct—and if it’s the latter then we may not achieve the level of clarity of differentiation we seek.”

The “relationship is strained” with Kevin Systrom, Mosseri added.

It was important to hear these concerns from a senior leader who’s currently at Meta, and not just from co-founder Kevin Systrom, who Meta has done its best to paint as motivated by sour grapes. The takeaway was that Instagram was resource-constrained at the time Systrom exited, paring back Meta’s proposed procompetitive justification that Meta’s acquisition of Instagram was helpful because it unlocked resources that helped Instagram become safer and grow faster.

But on cross, while Mosseri admitted that he “disagreed with some of the changes” to resolve the resource tradeoffs between the two apps, “ultimately they were at the margins” and Instagram “ended up stronger for a lot of them.” As one example, when Instagram “didn’t have access to” Facebook’s social graph data, it built its own “graph infrastructure.” That bit didn’t sound so credible, and in fact showcased another drawback from Zuckerberg’s hamstringing of Instagram—cutting off its access to the social graph. What kind of upside justified doing that in 2018 other than to win an arm wrestling contest with Systrom? After the 2018 pivot, Mosseri’s concerns about integrity were “addressed,” but the “work on safety and integrity never stops.” Today, Instagram and Facebook are at “about the same level of maturity” on integrity, with some different strengths and weaknesses reflecting differences in the user base between the apps.

Zuckerberg’s reply to the above email undermines what Meta is arguing today, that its apps aren’t about friends and family so much anymore (emphasis added):

“[N]one of this is to suggest IG shouldn’t continue being about friends, and I don’t think friends can become secondary. . . . I wonder if the use case mix should get closer to 60/40 or even 50/50 as we grow more public use cases. . . . Right now IG and FB are highly overlapping, and I do not think it would be valuable to intentionally cover a wider variety of use cases with more differentiated graphs. Focusing IG on video and FB more on messaging is one way to both develop a proactive strategy and increase differentiation, but in any world the services will still be overlapping with both requiring strong social foundations. . . . I agree this discussion seems much more emotional than it needs to be.”

A 2018 deck with a Venn diagram showing the overlap between Facebook and Instagram drove that point home: Meta labeled Facebook as the “everyone you know” social network, and Instagram as the “everyone you want to follow” network covering both “close friends” and “interests.”

While Instagram later moved into short-form video to compete with TikTok’s video product, it made a deliberate decision not to leap into long-form video. Why not? Because “it’s part of our core identity to connect people with friends,” Mosseri explained in the below Instagram post from just last year that the FTC played in court:

mosseri

A post shared by @mosseri

Instagram “Absolutely” Competes with TikTok

On cross, Kellogg Hansen’s Aaron Panner focused on TikTok as a competitor to Meta. One exhibit showed that Instagram was facing declines in “sessions, time spent, feed impressions” and other metrics in 2019, conservatively estimating that “40% of IG’s y/y decline in time spent is due to TikTok.” Mosseri “absolutely” perceived TikTok as competing with Instagram—it’s been “the fiercest competition we’ve faced during my time at the company.” In Mosseri’s telling, that only intensified after the pandemic, which was a growth opportunity for TikTok. Consumers were spending less or no time commuting as they worked from home, leaving more time for creating and consuming content. That caused a “swell of inventory”—here, content—across the industry, but “[b]y far the biggest beneficiary was TikTok,” Mosseri said. A March 2020 email from Mosseri reinforced that idea, where he blamed “competition from TikTok and Snapchat,” as well as some mistakes in short-form video, for causing a decline in time spent on Instagram.

Panner had his own Instagram video from Mosseri up his sleeve, as it was transcribed on Stratechery:

mosseri

A post shared by @mosseri

This was the key part of what Mosseri said in the video (emphasis added):

“But today I actually want to talk a bit more about video. And I want to start by saying we’re no longer a photo-sharing app or a square photo-sharing app. The number one reason that people say that they use Instagram in research is to be entertained. So people are looking to us for that. So actually, this past week in our internal all hands, we shared, or I shared, a lot about what we’re trying to do to lean into that trend — into entertainment and into video. Because let’s be honest: there’s some really serious competition right now. TikTok is huge, YouTube is even bigger, and there’s lots of other upstarts as well. And so people are looking to Instagram to be entertained, there’s stiff competition and there’s more to do, and we have to embrace that. And that means change.”

Competition with TikTok spurred Meta to develop Reels, which was so important that Mosseri updated the board on it “every two months” and gave an “impromptu talk about Reels” at regular dinners among Meta executives. We heard the same story, almost verbatim, from Zuckerberg earlier in trial; both said the Reels updates at the executives dinner became a running joke, or as Mosseri put it, “a hazing ritual.”

TikTok and Instagram compete in messaging, too, we heard: 12% of teens say Instagram is their most-used messaging app, vs. 6% who answer TikTok, Mosseri said. And Instagram invests in convincing creators to use its app with incentive payments, which in one year totaled $600-$700 million, Mosseri testified.

According to Mosseri, Instagram also competes against YouTube on two of these dimensions: video and creators, but not messaging, which YouTube doesn’t offer anymore. Mosseri recalled that he started focusing on YouTube as a competitor around 2013 or 2014 while still on the Facebook side of things. Around that time, there was data showing that “if they [YouTube] had an outage, our time spent went up and vice versa.”

But Mosseri didn’t give Meta everything it wanted to establish on cross, true to his credibility. Panner was trying to show that the experience of watching a video across TikTok, YouTube, and Instagram looks the same. Mosseri said that the experiences are “not identical”: while it’s “probably pretty hard for most people to tell them apart,” there are some differences. The different algorithms, of course, are one. So is length. Add to that messaging, which YouTube doesn’t have. Mosseri also said he considered Snapchat as Instagram’s “largest competitor”—but that helps the FTC’s case, because Snapchat is inside its defined PSN market and because it makes TikTok look like a more distant competitor.

Summing up on cross, Mosseri called the Instagram deal “one of the best acquisitions of all time,” as both Facebook and Instagram “benefitted greatly.” Instagram drew on infrastructure for ads and safety and know-how from “lessons learned” so it could “avoid the same mistakes” that the “older sibling” made. It was a “really amazing[] success on both sides.”

On re-direct, Mosseri had another moment of lesser credibility. The FTC’s Musser showed an email where he wrote: “Through all of this, connecting with friends and family has remained the most stated reason that people use Facebook.” Mosseri said “this is incorrect” and that he “wouldn’t write the entire post myself.” Sure, Jan.

Before leaving the stand, the FTC had one more Mosseri interview, from The Verge in 2022:

Meta objected, but Mosseri’s statements here, as admissions of a party-opponent witness, came into evidence. Plus ça change, plus c'est la même chose: the more things change, the more they stay the same. For all its focus on TikTok, the FTC showed that Instagram remains centered on sharing between friends and family.

Groovy Baby

We’ve seen Meta’s Alex Schultz on the witness stand twice now, on Days 15 and 16. He’s served as Meta’s corporate representative throughout trial, so he’s been sitting at the counsel table, too. He hasn’t finished testifying; Meta’s cross-ex began on Day 16. We’ll wait until he’s finished to summarize what he had to say. He’s a colorful guy; he dropped that he’s gay on the witness stand, although no one asked.

Meta’s Alex Schultz is a spitting image of this Jaguar marketing executive from Season 5, Episode 5 of Mad Men, shown at left. Credit: Jordin Althaus.

We’ll be back for Week 4, when Schultz’s testimony will finish. Due up next is the FTC’s most important witness of its case-in-chief: economist C. Scott Hemphill.

Stray Thoughts

• One thing that has made this trial run long is that the lawyers are asking every possible question to every possible witness. It seems like every witness is asked about the features available on TikTok, YouTube, and Facebook/Instagram, even if they’re witnesses from third parties or not as familiar with those apps. These points really only need to be established once, and they were mostly explained in sufficient detail in the opening tech tutorials. Chief Judge Boasberg wanted to have those tutorials precisely so that trial time wouldn’t be wasted asking every witness to explain every app. Yet that is what the parties’ lawyers keep doing. It’s admirable to believe that “every witness is my witness” and to try to get admissions from every witness on every topic. But both sides would have been better served by hewing more closely to what we call an “order of proof”: a document that tracks the testimony and statements from admitted exhibits during trial and lines them up with the law and factual propositions each side is trying to prove. Updating that document nightly is a lot of work but helps narrow things going forward.

• Another frustrating and time-consuming practice has been the parties’ attempts to lead witnesses—that is, asking questions that have the sought-for answer in the wording of the question itself—by using the witness’s past statements in interviews and other documents. One reason to lead witnesses is to save time, generally permitted in a case-in-chief even with non-hostile witnesses to do housekeeping foundation like asking about their background. But all the foundational questions for using the exhibit, or attempting to “refresh recollection” or impeach, are themselves taking a lot of time.

• Meta, for its part, would be better served to stop objecting as often when there’s an attempted refreshing of recollection or impeachment through confrontation with a contrary prior statement. Maybe Meta thinks it’s preserving something for an appeal, but lead lawyer Mark Hansen’s “improper impeachment” objections in particular aren’t going to be a basis for an appeal and, when directed at opposing counsel who are younger women, give a Gran Torino, get-off-my-lawn kind of air. Most importantly, Meta’s objections for the most part have been plain wrong as a legal matter.

• On Bloomberg’s Odd Lots podcast this week, Joe Weisenthal asked Sarah LaFleur, the CEO of M.M.LaFleur, the women’s clothing company, about how things are going with digital advertising. She decried the “lack of competition” with Facebook and Instagram, which has caused advertising costs to skyrocket. When M.M.LaFleur first started advertising, the cost of acquiring a new customer through advertising was $13; today, it’s around $250—a price increase of 1,900%. M.M.LaFleur tried advertising on Reddit and TikTok, two apps Meta would like to be in the relevant market in the FTC trial, to “mixed success.” Check it out around the 30-minute mark: