Kevin Systrom, the co-founder of Instagram, testified on Tuesday in a landmark federal antitrust trial that his startup was starved of resources after Meta acquired it because the chief executive, Mark Zuckerberg, was afraid of the success of the photo-sharing app.
“Mark was not investing in Instagram because he believed we were a threat to their growth,” Mr. Systrom said.
The government has argued that Meta purchased Instagram in 2012 as part of a “buy-or-bury strategy” to illegally cement its social media monopoly by killing off its rivals. Last week, Mr. Zuckerberg testified that the social media giant, formerly known as Facebook, used its deep pockets to invest in Instagram after its purchase.
In testimony at the U.S. District Court of the District of Columbia, Mr. Systrom contradicted that, saying he left Meta in 2018 because of Mr. Zuckerberg’s lack of investment. At that time, Instagram had grown to 1 billion users, about 40 percent of Facebook’s size, yet the photo-sharing app had only 1,000 employees compared to 35,000 employees at Facebook, he said.
“We were by far the fastest growing team. We produced the most revenue and relative to what we should have been at the time, I felt like we should have been much larger,” said Mr. Systrom.
Mr. Systrom said he found the decisions baffling. When asked by a lawyer for the Federal Trade Commission why Mr. Zuckerberg might have decided to give Instagram fewer resources, Mr. Systrom said the Facebook co-founder believed it was a threat to the app he created.
“As the founder of Facebook, he felt a lot of emotion around which one was better, meaning Instagram or Facebook. And I think there were real human emotional things going on there,” Mr. Systrom added.
The case, Federal Trade Commission v. Meta Platforms, entered its second week on Monday and hinges on Meta’s purchases of Instagram, more than a decade ago for $1 billion, and WhatsApp, in 2014 for $19 billion. The government has argued that the acquisitions harmed competition by removing promising startups from the market that could have challenged Meta’s dominance.
The company and Mr. Zuckerberg were paranoid about the rise of smaller rivals, which offered superior products to those built by Meta, the government has argued. By buying both companies, Meta hurt competition and consumers who were deprived of more choices, the government has said.
The F.T.C. seeks to break up the social media giant, threatening Meta’s $165 billion advertising business, alongside 3.5 billion users who get and share information from the company online.
Mr. Zuckerberg, the first witness called by the government, said last week that Meta provided key technological help to Instagram, including spam filtering technology and eventually computing systems to store content and operate the app.
On Tuesday, Mr. Systrom said that Instagram had spam “under control,” and that the company already had a solid technology infrastructure provided by Amazon.
The government’s case against Meta is part of a broad assault against the power of the biggest tech companies. Last week, the Justice Department won an antitrust case against Google’s monopoly in parts of ad technology, the second government victory after winning a case against Google’s search monopoly last year. On Tuesday, in the same courthouse where Mr. Systrom testified, a judge heard arguments from the Justice Department to break up Google over its anticompetitive behavior to dominate search.
The F.T.C. and the D.O.J. have also sued Amazon and Apple over claims of anticompetitive behavior.
The Trump administration first sued Meta over allegations of an anticompetitive acquisition strategy in December 2020. The case is the third against a tech giant to go to trial in two years.
The F.T.C. is testing antitrust law with a novel case that relies on a rarely used legal theory that Meta sought to kill competition through mergers. The F.T.C. approved the purchases of Instagram and WhatsApp more than a decade ago.
The government’s questioning of Mr. Systrom focused on events from around the time he co-founded Instagram in 2010 as a photo-sharing app for mobile phones. From the time of its launch, growth was “exponential, unstoppable,” Mr. Systrom said. The app registered 25,000 users its first day. By January 2012, Instagram was adding 4 million users a month.
The government previously pressed Mr. Zuckerberg about the acquisitions, showing him internal communications about Meta’s growing rivalry with Instagram. Mr. Zuckerberg said in one email he sought to “neutralize” Instagram as a competitor.
In an email exchange on Feb. 11, 2012, Mr. Zuckerberg proposed Meta acquire Instagram and “keep their product running and just not add more features to it.” The F.T.C. said that demonstrated that Meta bought Instagram to kill it off.
The F.T.C. has also argued that other investors wanted to buy or pump funds into Instagram, something that could have transformed it into a true rival.
Roelof Botha, a partner at Sequoia Capital, which invested in Instagram, said in video testimony on Monday that the venture capital firm would have been able provide funding to support the company’s growth.
Instagram had investors feeling like it was “lightening in a bottle” he said. He wanted to invest more money into Instagram but faced intense competition.
There were “too many pigs at the trough,” Mr. Botha added.
