FTC v. Meta live: updates from the battle for Instagram and WhatsApp

• Messenger exec was ‘not at all’ concerned about WhatsApp becoming a major competitor.

  Deng, who led product for Facebook’s messenger product in the early 2010s, says he was not worried about WhatsApp growing into a big rival in the US. Since many people in the US had iPhones where they could send mobile messages including photos through iMessage, he says, “people just expected more here than just text messaging,” which was the focus of the simple WhatsApp service. “There’s nothing about what they did that signaled they remotely wanted to get into more expressive messaging.” he says.

• ‘We’re all terrified.’

  Former product executive Peter Deng warned colleagues about the existential threat of mobile messaging apps moving into Facebook’s core space. In an October 2012 email, he called messaging rivals “the biggest threat to our product that I’ve ever seen in my 5 years here at Facebook; it’s bigger than G+, and we’re all terrified,” he wrote, referring to Google’s now-defunct social media competitor. “These guys actually have a credible strategy: start with the most intimate social graph (i.e. The ones you message on mobile), and build from there.” Deng testifies he was referring to the three mobile apps that had started adding such features, and not the one Facebook ultimately acquired: WhatsApp.

• 

  People don’t come to TikTok to connect with real-life friends.

  Former TikTok director of UX research Eric Morrison testifies in a short video deposition that as of 2022, unlike Facebook and Instagram, TikTok “was not necessarily serving that need to connect to people that you already know.” This is the need that the FTC says Facebook and Instagram uniquely fill, alongside the smaller apps Snapchat and MeWe.

• 

  Meta has grown despite the threat of TikTok.

  Hegeman concedes that even with TikTok becoming a more significant competitor in the past two years, Facebook’s user base and the time users spend on it have continued to grow.

• 

  Meta throws a jab at Apple over its developer policies.

  Hegeman says that the (not publicly disclosed) number of users who opted out of off-app tracking through Apple’s App Tracking Transparency policy mostly reflects Apple’s scare tactics in framing the question to users, rather than whether users actually prefer not to share their data with Meta. He adds that Apple frames the ask very differently when asking users about similar opt-ins for its own products. “I think it’s a clear example of them trying to leverage their position controlling the iOS operating system to advantage their position in the market,” he says.

• 

  Focusing on friends and family wasn’t a great strategy for Meta.

  Sometime after 2018, Meta realized that focusing on surfacing friends and family content wasn’t helping it as much as it had hoped. Competitors like TikTok were taking over a lot of time users would spend online, and Hegeman says Meta found it to be a better strategy to broaden the focus of the Facebook app to include investments in video and other kinds of content.

• 

  Ads aren’t a huge cost for users.

  In 2021, Meta found that by reducing the relative amount of ads some groups saw by 80 percent, it only saw about a 3 percent increase of a usage metric. This shows ads aren’t a major cost for consumers, Hegeman says, because if a company like Apple lowered the price of its iPhone by 80 percent, it would likely see much more than a 3 percent increase in sales.

• 

  ‘Very little interest’ in Meta’s ad-free subscription in Europe.

  In response to regulations in the EU, Meta began offering an ad-free version of its products there for 6 Euros a month. But that offering hasn’t caught on, Hegeman says — just about 0.007 percent of users opted to pay for the service.

• 

  Users don’t really notice when Meta shows them more ads.

  Meta found when it tested a new system to customize how many ads it shows based on how much a user likes or dislikes them, users didn’t seem to know the difference. The time they spent on the platforms and engaged on it didn’t change much. “This change had a minimal impact on people’s experience and was not very noticeable,” Hegeman says.

• 

  Apple’s privacy changes let users block Meta from tracking them off-app.

  The FTC is asking Meta about Apple’s 2021 App Tracking Transparency policy that let users decide whether to let developers track their activity off-app to help serve more persoanlized ads. Meta warned investors in 2022 that it would result in a $10 billion revenue hit to its business that year. That’s presumably because when users are given an option to give Facebook and Instagram less data, at least a significant chunk of them take it. We don’t know exactly how many, though, since the judge sealed the courtroom to discuss internal metrics like how many people opted into the tracking.

• 

  Would Instagram have collected less user data without Meta?

  That’s theme of the FTC’s questioning of Meta’s CRO. The FTC’s Stephen Pearson is asking about what Meta says it collects in its privacy policy, and points out that if Instagram were independent, it would have its own policy. Meta uses this data to fuel personalized advertising, which makes money for the company. Pearson is also beginning to touch on ad load — or the relative amount of ads to organic posts users see in their feed — which the FTC has tried to show Meta can increase with relatively little risk of losing users.

• 

  Meta’s chief revenue officer is up next.

  John Hegeman, the top executive in charge of monetizing Facebook and Instagram, just took the stand. He previously led product management for the Facebook feed.

• 

  Users don’t actually want a chronological feed.

  What users say they want and what they show they want through their actions can be two different things. Cobb illustrates this point with the example of chronological feeds. While users repeatedly report this as a feature they’d like, Cobb says every time the company has tested it, satisfaction with the app declines and users’ engagement changes.

• 

  Meta saw a ‘precipitous decline’ in user sentiment after its speech policy changes.
• 

  Media events can impact how users feel about Meta, even if the product doesn’t change.

  Dips in how users feel about Meta’s brand are often correlated to media coverage — not necessarily actual changes to the product, Meta research executive Curtiss Cobb testifies on cross-examination. The FTC had tried to frame the fact that users don’t leave the apps in droves after reporting feeling worse about Meta’s brand shows they’re locked in due to Meta’s alleged monopoly. Meta is trying to complicate this picture, by showing that just because users feel worse about the brand after a specific media event doesn’t mean that its products are getting any worse — and that might be reason enough to stay.

• 

  House Republicans drop their bid to strip the FTC’s antitrust authority.
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  Cambridge Analytica had the ‘most extreme to date’ impact on how users feel about Meta.

  A June 2019 document says that the data privacy scandal “is the most likely significant event that would have had a negative impact on both revenue and engagement.” But even so, Meta’s research team found, “we failed to detect significant and consistent effects of sentiment (or adverse events) on these metrics.” Cobb quibbled with how the FTC’s attorney restated the finding back to him, and Boasberg noticeably leaned back in his chair and rolled his eyes after a repeated back-and-forth, before ending the proceedings for the day.

• 

  Keeping up with friends is important to Facebook users.

  In 2018, Meta found that a majority of Facebook users came to the platform for this reason. A document from the time describes “Facebook’s core value proposition” as “robustly anchored on ‘keeping up with friends and family,’” which is exactly the trait the FTC says is unique to personal social networking services. Cobb makes a point of saying that this was true at the time, seven years ago.

• 
  

  

  TikTok is back in a Washington, DC courthouse discussing the US law that — at least on paper — effectively banned the app. But this time, it’s serving as a witness for the government, not fighting against it.

  On Wednesday, TikTok’s head of operations and trust and safety Adam Presser testified in the Federal Trade Commission’s antitrust trial against Meta, in the same courthouse where a panel of judges ruled that the government could expel TikTok from the country. Presser’s role in the Meta trial was to explain the ways in which TikTok competes (or doesn’t) with Meta’s services in a market the FTC has defined as personal social networking — a category the FTC says contains only Meta’s services, Snapchat, and a small app called MeWe.

  Read Article >

• 

  Does Meta care about its users?

  Meta VP of Research Curtiss Cobb, who tracks how users feel about the brand, just took the stand. His team surveys Facebook and Instagram users about how they feel about whether the company cares about its users. In 2020, for example, the team found that “in the US this year Facebook has slid to the 21st place and falls behind all other tech companies we measured” in the metric it calls “Relative Cares About Users” or RCAU.

• 

  Reworking ByteDance’s systems for a US-only TikTok would be costly.

  Drawing on filings in TikTok’s litigation against a US ban, Meta points out that TikTok has said it could take years to perform the maintenance needed to keep a US-only app running if it were separated from ByteDance. TikTok also said that reconfiguring its content moderation systems for a US-only app would reach unsustainable costs, despite serving a platform of 170 million US users. Meta is drawing a comparison to how it believes it was uniquely positioned to help Instagram with its infrastructure and content moderation because of its own scale and success.

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  The TikTok ban makes another cameo.

  Meta is asking about statements TikTok made in its lawsuit against the US ban of its app to show that when TikTok is unavailable, users often turn to Instagram — showing that users consider it to be a substitute in at least some respect. TikTok told the court in its own case that even a temporary shutdown could cause it to permanently cede ground to competitors like Instagram, YouTube and Snapchat. Earlier in the Meta trial, the company showed that TikTok’s temporary shutdown led to a spike in engagement for Instagram.

• 

  TikTok predicted Instagram would redesign its app to focus on Reels.

  In a 2022 document presented to TikTok’s leadership, the company wrote that Instagram would likely make Reels its “no. 1 format.” TikTok predicted, “Instagram will redesign the interface and consolidate everything to Reels to make the short-form video first.”

• 

  Are YouTube and Instagram the top competitors for TikTok?

  Presser is reluctant to say so straightforwardly, testifying that’s not exactly how he thinks about it. But Meta’s attorney shows him a 2021 internal document where TikTok wrote, “YouTube and Instagram are TikTok’s most important competitors.”

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  TikTok and Reels are ‘indistinguishable.’

  Meta is trying to muddy Presser’s testimony about the distinctions between TikTok and Instagram by pulling up a filing TikTok made with an Australian regulator, arguing against an age restriction exemption for YouTube. “Today, TikTok, Reels and Shorts are virtually — and deliberately — indistinguishable in function and user experience,” the company wrote in March. Presser reiterates that while their features are very similar, the experience of the content on each app is different.

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