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Power

In antitrust suits, Facebook’s biggest liability is Zuckerberg’s own words

The suits from a coalition of 48 attorneys general and the Federal Trade Commission lean heavily on Zuckerberg's emails.

Facebook CEO Mark Zuckerberg

The lawsuits quote Facebook's CEO extensively on the topic of acquiring potential threats.

Photo: Alessio Jacona

Mark Zuckerberg's private communications about competition have gotten him in trouble before. Back in 2012, just before Facebook went public, Business Insider published a damning trove of instant messages from the CEO's Harvard days, in which he admitted to simultaneously building what would become Facebook and working on a dating site for Cameron and Tyler Winklevoss.

"I'm going to fuck them," the now infamous message reads. "Probably in the year …*ear."

More than a decade since those messages were sent, a lot has changed for Zuckerberg. But the things he has said about would-be competitors — in this case, Instagram and WhatsApp — are, once again, coming back to bite him: probably in the year … *ear.

In two closely-aligned antitrust lawsuits filed against Facebook on Wednesday, attorneys for the Federal Trade Commission and a coalition of 48 state attorneys general repeatedly return to Zuckerberg's own emails and messages to underscore their core allegations of anticompetitive behavior. These emails, most of which were sent around 2012, when Facebook was fighting to stay relevant as consumers made the switch to mobile, might not include as much colorful language as Zuckerberg used back in college. But, the attorneys bringing the cases argue, each one makes clear that the primary reason Facebook acquired WhatsApp and Instagram was to nuke the competition.

"Billions were thrown at smaller companies in an effort to get them to sell," New York Attorney General Letitia James, who is leading the states' suit, said during a press conference Wednesday. "Facebook would try to squeeze every bit of oxygen out of the room for smaller companies that refused to be bought."

In a statement Wednesday, Facebook's general counsel, Jennifer Newstead, accused the lawyers behind the lawsuits of creating a "revisionist history," noting that the FTC reviewed and approved both transactions in the past. "Now the agency has announced that no sale will ever be final, no matter the resulting harm to consumers or the chilling effect on innovation," Newstead wrote. "This lawsuit risks sowing doubt and uncertainty about the U.S. government's own merger review process and whether acquiring businesses can actually rely on the outcomes of the legal process."

Both complaints repeatedly point to a series of emails that also came up in a recent report by the House antitrust subcommittee. They're from an early 2012 exchange between Zuckerberg and Facebook's then-chief financial officer, David Ebersman, in which the two men discuss whether Facebook should consider buying Instagram. Ebersman asks Zuckerberg whether he's trying to "1) neutralize a potential competitor? . . . 2) acquire talent?. . . 3) integrate their products with ours in order to improve our service? . . . [or] 4) other?"

Zuckerberg responds that it's "a combination of (1) and (3)," neutralizing a competitor and integrating Instagram's products. He then goes on to explain a theory of "network effects" in tech that would make it difficult for Facebook to ever overcome Instagram's lead.

"There are network effects around social products and a finite number of different social mechanics to invent. Once someone wins at a specific mechanic, it's difficult for others to supplant them without doing something different," Zuckerberg wrote. "What we're really buying is time."

In another exchange that same year, Zuckerberg mused about WhatsApp's growth, acknowledging that it is "legitimately a better product for mobile messaging than even our standalone Messenger app."

"Unfortunately for us," Zuckerberg wrote, "I don't think there's any way to directly minimize the advantage which is their momentum and growth rate."

And so, Zuckerberg's messages indicate, an acquisition became an appealing option for the same reason Instagram had been. "WhatsApp is already ahead of us in messaging in the same way Instagram was 'ahead' of us in photos," Zuckerberg wrote in an April 2012 message quoted in the FTC's complaint. "I'd pay $1b for them if we could get them."

In the end, Facebook paid $19 billion.

The broad contours of the FTC and the states' cases are unsurprising. Facebook's fears about Instagram and WhatsApp are, at this point, the subject of innumerable news articles and books. But the sheer quantity of raw material that the lawsuits compiled, particularly from Zuckerberg himself, is novel. "I think the one thing I was really excited about from these complaints is that they actually produce additional damning evidence," said Sally Hubbard, director of enforcement strategy at Open Markets Institute. "Because they had subpoena power, they had even more documents and damning evidence that shows the anticompetitive intent."

The states' complaint pays particular attention to Facebook's treatment of third-party apps it viewed as potential threats. In one previously reported case, Zuckerberg personally approved cutting off the short-video app Vine from an API feature that allowed people to find their Facebook friends on the app. "Yup, go for it," Zuckerberg wrote to a member of his team. In another case, the complaint quotes Zuckerberg commenting in August 2013 on an app called Circle, telling other Facebook executives that Circle was "very similar to the local vision you described to me a while ago [for Facebook]." Four months later, Facebook also cut Circle off from the Find Friends feature.

"Facebook roughly cut off apps viewed as a competitive threat. Some of these companies experienced an almost overnight drop-off in user engagement and downloads and their growth stalled," James said. "They also sent a clear message to the industry. Don't step on Facebook's turf or, as one industry executive put it, 'You will face the wrath of Mark.'"

Both the FTC and the states are asking the court to require Facebook to halt these practices and possibly even undo acquisitions that the court determines to have been illegal. The case is bound to be a long, drawn-out retread of Facebook's decisions over the last decade. But it will also be an illuminating probe into the mind of one of the most powerful men in the world and how he held onto that power by undercutting his competition — from Facebook's earliest days.

Emily Birnbaum contributed reporting.

Power

Yes, GameStop is a content moderation issue for Reddit

The same tools that can be used to build mass movements can be used by bad actors to manipulate the masses later on. Consider Reddit warned.

WallStreetBets' behavior may not be illegal. But that doesn't mean it's not a problem for Reddit.

Image: Omar Marques/Getty Images

The Redditors who are driving up the cost of GameStop stock just to pwn the hedge funds that bet on its demise may not be breaking the law. But this show of force by the subreddit r/WallStreetBets still represents a new and uncharted front in the evolution of content moderation on social media platforms.

In a statement to Protocol, a Reddit spokesperson said the company's site-wide policies "prohibit posting illegal content or soliciting or facilitating illegal transactions. We will review and cooperate with valid law enforcement investigations or actions as needed."

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Issie Lapowsky
Issie Lapowsky (@issielapowsky) is a senior reporter at Protocol, covering the intersection of technology, politics, and national affairs. Previously, she was a senior writer at Wired, where she covered the 2016 election and the Facebook beat in its aftermath. Prior to that, Issie worked as a staff writer for Inc. magazine, writing about small business and entrepreneurship. She has also worked as an on-air contributor for CBS News and taught a graduate-level course at New York University’s Center for Publishing on how tech giants have affected publishing. Email Issie.
Power

In California, machines could determine where vaccines go

A firm called Macro-eyes is using machine learning to predict which of California's community health centers are equipped to handle the vaccine.

With data on vaccine preparedness in community health centers scarce, Direct Relief is turning to machine learning firm Macro-eyes for help "predicting the present."

Photo: Province of British Columbia/Flickr

Andrew Schroeder has been trying for a while now to figure out which of California's community health centers are equipped to handle and distribute the COVID-19 vaccine. These are the places that serve California's poorest people — more than 7 million of them, to be exact — and, as vice president of research and analysis for the humanitarian aid organization Direct Relief, Schroeder wants to make sure they're ready for the vaccine as more supply becomes available.

So, working with the California Primary Care Association, he recently sent a survey around to the organizations that manage some 1,370 federally qualified healthcare centers in the state, asking questions about their power sources, their refrigeration capabilities and their staffing. In the end, the survey yielded data on just 106 sites — less than 8% of the total.

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Issie Lapowsky
Issie Lapowsky (@issielapowsky) is a senior reporter at Protocol, covering the intersection of technology, politics, and national affairs. Previously, she was a senior writer at Wired, where she covered the 2016 election and the Facebook beat in its aftermath. Prior to that, Issie worked as a staff writer for Inc. magazine, writing about small business and entrepreneurship. She has also worked as an on-air contributor for CBS News and taught a graduate-level course at New York University’s Center for Publishing on how tech giants have affected publishing. Email Issie.

Microsoft wants to replace artists with AI

Better Zoom calls, simpler email attachments, smart iPhone cases and other patents from Big Tech.

Turning your stories into images.

Image: USPTO/Microsoft

Hello and welcome to 2021! The Big Tech patent roundup is back, after a short vacation and … all the things … that happened between the start of the year and now. It seems the tradition of tech companies filing weird and wonderful patents has carried into the new year; there are some real gems from the last few weeks. Microsoft is trying to outsource all creative endeavors to AI; Apple wants to make seat belts less annoying; and Amazon wants to cut down on some of the recyclable waste that its own success has inevitably created.

And remember: The big tech companies file all kinds of crazy patents for things, and though most never amount to anything, some end up defining the future.

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Mike Murphy

Mike Murphy ( @mcwm) is the director of special projects at Protocol, focusing on the industries being rapidly upended by technology and the companies disrupting incumbents. Previously, Mike was the technology editor at Quartz, where he frequently wrote on robotics, artificial intelligence, and consumer electronics.

Protocol | China

More women are joining China's tech elite, but 'Wolf Culture' isn't going away

It turns out getting rid of misogyny in Chinese tech isn't just a numbers game.

Chinese tech companies that claim to value female empowerment may act differently behind closed doors.

Photo: Qilai Shen/Getty Images

A woman we'll call Fan had heard about the men of Alibaba before she joined its high-profile affiliate about three years ago. Some of them were "greasy," she said, to use a Chinese term often describing middle-aged men with poor boundaries. Fan tells Protocol that lewd conversations were omnipresent at team meetings and private events, and even women would feel compelled to crack off-color jokes in front of the men. Some male supervisors treated younger female colleagues like personal assistants.

Within six months, despite the cachet the lucrative job carried, Fan wanted to quit.

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Shen Lu

Shen Lu is a Reporter with Protocol | China. She has spent six years covering China from inside and outside its borders. Previously, she was a fellow at Asia Society's ChinaFile and a Beijing-based producer for CNN. Her writing has appeared in Foreign Policy, The New York Times and POLITICO, among other publications. Shen Lu is a founding member of Chinese Storytellers, a community serving and elevating Chinese professionals in the global media industry.

Politics

Facebook’s Oversight Board won’t save it from the Trump ban backlash

The Board's decision on whether to reinstate Trump could set a new precedent for Facebook. But does the average user care what the Board has to say?

A person holds a sign during a Free Speech Rally against tech companies, on Jan. 20 in California.

Photo: Valerie Macon/Getty Images

Two weeks after Facebook suspended former President Donald Trump's account indefinitely, Facebook answered a chorus of calls and referred the case to its newly created Oversight Board for review. Now, the board has 90 days to make a call as to whether Trump stays or goes permanently. The board's decision — and more specifically, how and why it arrives at that decision — could have consequences not only for other global leaders on Facebook, but for the future of the Board itself.

Facebook created its Oversight Board for such a time as this — a time when it would face a controversial content moderation decision and might need a gut check. Or a fall guy. There could be no decision more controversial than the one Facebook made on Jan. 7, when it decided to muzzle one of the most powerful people in the world with weeks remaining in his presidency. It stands to reason, then, that Facebook would tap in its newly anointed refs on the Oversight Board both to earnestly review the call and to put a little distance between Facebook and the decision.

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Issie Lapowsky
Issie Lapowsky (@issielapowsky) is a senior reporter at Protocol, covering the intersection of technology, politics, and national affairs. Previously, she was a senior writer at Wired, where she covered the 2016 election and the Facebook beat in its aftermath. Prior to that, Issie worked as a staff writer for Inc. magazine, writing about small business and entrepreneurship. She has also worked as an on-air contributor for CBS News and taught a graduate-level course at New York University’s Center for Publishing on how tech giants have affected publishing. Email Issie.
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