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Zuckerberg Bragged Of Buying Instagram To Kill Competition

Facebook may be in for a fight with the feds over Instagram that’s been brewing for a long time.

The Federal Trade Commission — which on Tuesday launched a new task force with the power to undo tech deals previously approved by the feds — seriously weighed an attempt to block Facebook’s acquisition of Instagram more than six years ago, The Post has learned.

Driven by concerns about Facebook’s fast-growing dominance among social networks, the FTC in 2012 contemplated filing a lawsuit contesting the $1 billion hookup — widely viewed as one of the most successful tech mergers in history, two sources with close knowledge of the deliberations told The Post.

At the center of arguments to block the deal — made by then-FTC Chairman Jon Leibowitz — was a document the FTC had uncovered by a high-ranking Facebook executive who said the reason the company was buying Instagram was to eliminate a potential competitor, sources said.

“It was a spectacular document,” one source close to the situation said, declining to say whether Facebook CEO Mark Zuckerberg himself had written it.

Despite being armed with the explosive document, Leibowitz couldn’t generate enough support from his fellow commissioners to file a suit, sources said.

Most of the FTC’s five commissioners were concerned they wouldn’t win — thanks to antitrust laws that equate market share with revenue, a source said. Instagram at the time had no revenue.

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“Under existing standards, there was probably not enough evidence to sue Facebook,” Wharton professor Herbert Hovenkamp told The Post.

Facebook, which had already accumulated a 60 percent share of the social network market, helped push the merger through by arguing that Instagram was a photo-sharing site for smartphones — not a social networking site.

In August 2012, four months after Facebook announced the Instagram deal, the FTC approved it.

The FTC Tuesday said it has formed a task force to review “anticompetitive conduct” in the tech world amid concerns that tech companies are growing too powerful.

The task force will look at “the full panoply of remedies” if it finds “competitive harm,” FTC competition bureau director Bruce Hoffman told reporters.

That could include unwinding deals and forcing spinoffs “that would recreate the pre-merger state of competition,” he said.

The Post’s October Freedom of Information Act request to the FTC for memos pertaining to its 2012 Instagram review was denied earlier this month when the FTC said it had found records, all of which were “exempt” from public disclosure.

The FTC said the records requested pertains to “likely” litigation. “It does not matter that litigation never ensued.”

The FTC declined further comment. Leibowitz, now a Davis Polk attorney, declined comment.

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Zuckerberg, known for buying up popular apps, including Instagram and messaging service WhatsApp, last month revealed plans to merge its chat platforms — a move observers saw as an effort to stave off a potential future breakup.

The FTC is also considering slapping Facebook with penalties tied to its recent privacy scandals, including allowing a political consulting firm to suck up data from millions of users without their consent.

FTC staff has weighed fines of up to $5 billion, the Wall Street Journal has reported.

Source: nypost

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