Meta trial shows the dangers of sale

Meta has a lot in discussion in electricity Ftc lawsuit against him. In theory a negative verdict may result in a division of the company. But Ceo Mark Zuckerberg once faced an even greater existential threat. Back in 2006, his investors and even his employees were pressuring him to sell his two -year starting for a quick pay. Facebook was still a college -based social network, and some companies were interested in buying it. The most serious offer came from Yahoo, which offered a stunning dollars. Zuckerberg, however, believed that he could raise the company to something of much more value. The pressure was extraordinary, and at one point he was noticeable, agreeing in principle to sell. But shortly thereafter, a decrease in Yahoo’s shares led her leader at the time, Terry Semel, to require a price adjustment. Zuckerberg seized the opportunity to close the negotiations; Facebook would remain in his hands.

“That was the most stressful time in my life,” Zuckerberg told me years later. So it is ironic to observe, through the testimony of this judgment, how he handled two other groups of founders in very similar situations – but which he successfully bought.

The current FTC court seems to depend on how US District Court Judge James Boasberg will determine the Meta market – whether it is limited to social media or, as Meta is arguing, the broader field of “entertainment”. But many of the early testimony exhumed details of Zuckerberg’s successful follow -up on Instagram and WhatsApp – two companies that, according to the government, are now part of the illegal Meta monopolistic control on social media. (The trial also summoned the SNAP case, which resisted the $ 6 billion bid and had to deal with Facebook by copying its products.) Legalities aside, the way these companies grew from a Zuckerberg bid made the first days of this case a dramatic study of the smallest and large business dynamics.

Although almost all of these narratives have been covered in length over the years – I documented them quite completely on my 2020 account Facebook: Internal History– It was surprising to see the directors who testified under the oath of what happened. Hey, my resources were very good, but I was not to swear them!

In their testimony, witness star Zuckerberg and collaborator on Instagram Kevin Systrom agreed on facts, but their interpretations were Mars and Venus. In 2012, Instagram was about to close a $ 500 million investment round, when the small company suddenly found itself in the game, with Facebook in hot chase. In an email at the time, Facebook’s CFO asked Zuckerberg if his goal was to “neutralize a potential competitor”. The answer was positive. This was not the way he put him in the systrome and collaborator Mike Krieger. Zuckerberg promised associates that they would control Instagram and could raise it on their way. They would have the best of both worlds – independence and great Facebook resources. Oh, and the $ 1 billion Facebook offer was double the company’s rating in the funding round to be closed.

Everything worked excellently for a few years, but then Zuckerberg began to deny the sources on Instagram, which her associates had built in a scam. Systrom proved that Zuckerberg looked envy for the success and cultural currency of Instagram, saying it His boss “believed we were damaging Facebook growth.” Zuckerberg’s snubs ultimately led to Instagram founders to leave in 2018. By that time, Instagram was probably controversial perhaps 100 times Zuckerberg’s purchase price. Spoils of Systrom and Krieger, though considerable, did not reflect the fantastic value they had built for Facebook.