An Ugly Truth: Inside Facebook's Battle for Domination [calibre 4.99.5]

But Hughes acknowledged that the seeds of Facebook’s problems were there from the beginning: the urgent-growth mind-set, the advertising business model, and Zuckerberg’s centralized power. No one individual, not even the friend he described as “a good person,” should have that much control over such a powerful institution. Facebook’s repeated data privacy violations were symptomatic of a bigger problem. Even a record penalty by the FTC wouldn’t deter the company’s dangerous business practices. With 2.3 billion users and a market valuation of $540 billion, it had become too big to be restrained by regulations alone.

“Obviously, my whole life has been changed by one of the biggest monopolies in the United States today,” Hughes said. “And so, I needed to take a step back and wrestle with the fact that Facebook has become a monopoly, and name that and explain why that happened, how that plays into all of its mistakes, and the growing cultural and political outrage,” he recalled. “And then also understand what can be done about it.”

Two months before Hughes’s op-ed, Zuckerberg had announced the plan to break down the walls between messaging services in Facebook, Instagram, and WhatsApp. The company would stitch together more of the back-end technologies of the apps and allow users to message and post content across them.5 Making the apps “interoperable” would be a boon for consumers, he said.6 If a user found a small business on Instagram, they would be able to use WhatsApp to message that business. Engineers would encrypt messaging on all the apps, providing more security to users.

“People should be able to use any of our apps to reach their friends, and they should be able to communicate across networks easily and securely,” Zuckerberg wrote. But in reality, he was fortifying the company. Blue, Instagram, and WhatsApp were three of the top seven apps in the United States,7 with a combined 2.6 billion users globally.8 Facebook could merge data from each app and glean richer insights into its users. Engineering teams would work more closely to drive greater traffic between the apps, keeping users within the Facebook family of apps longer and more exclusively. It was like scrambling the apps into an omelet.

Zuckerberg was backsliding on concessions he had made to government officials to get the original buyout deals through regulatory review. He was also reversing promises made to the founders of Instagram and WhatsApp to keep the apps independent. In 2012, he assured Kevin Systrom and Mike Krieger that he wouldn’t interfere with the look, feel, or business operations of Instagram. The founders were obsessed with the style and the design of Instagram and feared that Facebook, which had barely evolved its look from its earliest days, would mess with Instagram’s DNA. After the merger, Instagram had stayed at arm’s length from Zuckerberg and Sandberg, in its own space at MPK, one that was decorated differently from the rest of Facebook.9

Facebook’s vice president of development, Amin Zoufonoun, said the promises made to Instagram’s founders were restricted to the brand—that Facebook wouldn’t interfere with the look or feel of the photo-sharing app—and from the beginning of merger discussions, there was talk about how Instagram “would benefit from Facebook’s infrastructure.”

“Over time, Instagram increasingly shared more Facebook infrastructure as it became clear that we needed a more unified strategy across the company,” Zoufonoun said. But other employees described a more fraught relationship.

Instagram was popular among a younger demographic, while Blue’s average was skewing older. The contrast in demographics irked Zuckerberg, who feared Instagram could cannibalize the Facebook app.10 Within six years, he began to interfere with technological decisions at Instagram. He tried to introduce a tool that would drive Instagram traffic to Facebook. Sandberg, for her part, insisted on more ads on the app. Instagram introduced its first ads in November 2013 for select big brands. In June 2015, the photo-sharing app opened to all advertisers.11 Instagram had become hugely successful in the seven years under Facebook’s control, with an estimated value of $100 billion and a billion users.12 “Mark saw Instagram’s potential from the start and did everything he could to help it thrive,” Adam Mosseri, the head of Instagram, maintained. “It’s not logical for Facebook to do anything that would dampen this success.”

But for Instagram’s founders, Zuckerberg and Sandberg’s involvement became overbearing.13 Systrom and Krieger quit in September 2018, saying they were “planning on taking some time off to explore our curiosity and creativity again.”

The story was similar with WhatsApp. Jan Koum and his cofounder, Brian Acton, had sold WhatsApp on the condition that the company would operate independently from the rest of Facebook. Zuckerberg had assured Koum, who feared government surveillance via apps, that he would make privacy a priority. Both conditions were selling points to regulators as well. Acton claimed that Facebook trained him to explain to European regulators that merging would be challenging. “I was coached to explain that it would be really difficult to merge or blend data between the two systems,” he said.14 But eventually, Zuckerberg and Sandberg imposed themselves on WhatsApp and pressured Acton and Koum to monetize the messaging app. Acton said that, in a meeting with Sandberg, he proposed a metered pricing model that charged users a small fraction of a penny for a certain number of messages. Sandberg shot down the idea, claiming, “It won’t scale.”