A former Instagram rival is suing Meta, formerly known as Facebook, over allegations the company violated antitrust laws by cloning a competing product and ultimately killing its business.
The app, Phhhoto, launched in 2014, invited users to create and share short GIF-like videos. If this sounds familiar to you, it’s because the same functionality was popularized in Boomerang, an app created by Instagram. This feature is now integrated into Instagram’s main app experience.
New lawsuit, embedded below, alleges Facebook’s behavior violated antitrust laws by cutting off the app’s access to its social graphic, slowing down a proposed relationship, and ultimately releasing its own copy of the core functionality by Phhhoto: the video in a loop of a few seconds. .
Menlo Park’s attorney, Gary Reback, will represent Phhhoto in the lawsuit. Reback is best known for his involvement in the preparation of the federal government’s antitrust case against Microsoft, which ultimately did not split the tech giant but forced the company to open up certain aspects of its IT business – consequences that continue. are reverberating in the tech industry today.
Reback argues that Phhhoto’s experience underscores why it is damaging to the market when a big tech company buys out its competitors and starts running those companies.
“The record here shows that Facebook would have partnered with Phhhoto and launched this great new social network that would have rivaled Instagram,” Reback said. He pointed to the unusually practical approach Facebook’s senior management took with the nascent competitor.
Phhhoto climbed the iOS app charts after its launch, eventually boasting 3.7 monthly active users at its peak in popularity. As the trendy new social app grabbed attention, Facebook executives took an interest, including Mark Zuckerberg.
“On or about August 8, 2014, Zuckerberg downloaded and installed the app on his phone, entered his device’s phone number into the Phhhoto app, created a personal account, and posted a profile picture of himself. (reproduced below) on his new Phhhoto Account, ”the costume reads.
The costume includes receipts, namely Zuckerberg’s own selfie, taken while testing the app.
Instagram co-founder Kevin Systrom, who ran Instagram at the time, also downloaded the app and explored its features. According to the lawsuit, Facebook began wooing Phhhoto, offering partnership opportunities which he later foregone:
… Hurren, then head of strategic partnerships for Facebook, contacted Phhhoto, saying that Phhhoto was “really great.” Hurren first proposed to integrate Phhhoto’s technology into the Facebook Messenger service. When Phhhoto refused, Hurren offered to embed content from Phhhoto in Facebook users’ news feeds. Phhhoto invested heavily in this project, but ultimately Hurren did not move forward, citing internal “legal conversations” that “suspended” the project.
After the relationship failed to materialize, the lawsuit alleges that Facebook took a number of steps designed to drive it out of business, including removing pre-populated Instagram hashtags that indicate where the app’s content comes from. . Instagram also cut Phhhoto from its social graphic, preventing the competitor’s perceived users from connecting with their Instagram friends in the app.
There were some dramatic moments in Phhhoto’s disappearance: on October 22, 2015, the same day the company was due to launch an Android version of its app, Instagram launched Boomerang. The lawsuit identifies Boomerang product manager John Barnett as an “active user of Phhhoto.” At the time of launch, TechCrunch noted that Boomerang seemed “likely similar” to Phhhoto.
The lawsuit alleges Boomerang was the culmination of Facebook’s anti-competitive effort, effectively killing the small business with a copy app that replicated Phhhoto’s innovations “feature by feature”.
According to the lawsuit, Phhhoto was not even aware of the extent of Facebook’s aggressive behavior against other competitors at the time, learning more after the UK Parliament released a wealth of internal company documents. end of 2018.
Phhhoto wasn’t afraid to talk about Facebook’s shares as it all fell apart. “We watched Systrom and his product team quietly use Phhhoto almost a year before Boomerang was released,” Phhhoto co-founder Champ Bennett told TechCrunch in 2017.
After closing the app, Bennett said “it was no surprise at all” to see Instagram launch its own clone.