Zuckerberg bought Instagram as it was becoming a threat to Facebook
The email exchanges between Facebook CEO Mark Zuckerberg and former chief financial officer David Ebersman have revealed that Facebook (and Zuckerberg, in particular) wanted to buy Instagram to avoid competition as it could have hurt the social network. These email exchanges were made public by the US House antitrust subcommittee.
Rep Jerry Nadler (D-NY) on Wednesday grilled Zuckerberg about the Instagram acquisition during the testimonies from the Big Tech CEOs, including Amazon's Jeff Bezos, Sundar Pichai of Google and Tim Cook of Apple.
The emails revealed that Zuckerberg wanted to buy Instagram as it was becoming a threat to Facebook.
"Facebook, by its own admission saw Instagram as a threat that could potentially siphon business away from Facebook," Nadler said during the hearing on Wednesday.
"So rather than compete with it, Facebook bought it. This is exactly the type of anti-competitive acquisition the antitrust laws were designed to prevent," Nadler added.
Facebook bought Instagram for $1 billion in 2012, a shocking sum at that time for a company with 13 employees,
Instagram today has over one billion users and contributes over $20 billion to Facebook's annual revenue.
"I think the FTC had all of these documents and unanimously voted at the time not to challenge the acquisition," Zuckerberg said on Wednesday.
"In hindsight, it probably looks obvious that Instagram would have reached the scale that it has today. But at the time, it was far from obvious."
According to The Verge, the FTC completed its review of the acquisition in 2012 without holding any open hearings or issuing a public report.
The agency said it might reopen the inquiry at an unspecified future date, "as the public interest may require."
*Edited from an IANS report