Facebook CEO Mark Zuckerberg downloads a popular new app Phhhoto on August 8, 2014 and takes a selfie. Other Facebook executives and product managers soon followed. Then the social network took the initiative to integrate the photo.
But Facebook’s top executives’ interest in the photo was just a sham, according to a lawsuit filed Thursday by the startup in the Eastern District of New York, which has now come to an end. Instead, Facebook only wanted to eliminate competition, according to the suit, which accused the company of breach of antitrust.
In the suit, Phyhoto’s founders – Champ Bennett, Omar Elsayed and Russell Armand – claim that after Zuckerberg and other Facebook executives downloaded their app and contacted them about the partnership, no deal was struck. Instead Facebook launched a competing product that featured the photos. The suit says that Facebook also suppressed Fehito’s content within its photo-sharing app, Instagram.
The photo is represented by well-known lawyer Gary Ryback. In the 1990s, Ryback persuaded the Justice Department to prosecute. Microsoft for violating antitrust laws, a matter that Microsoft eventually settled in 2001. Phhoto’s lawsuit seeks unspecified monetary damages from Facebook.
Ryback said in an interview that the lawsuit stemmed from Zuckerberg’s personal involvement. He called Zuckerberg the “CEO of Monopoly” and said that the Facebook founder was involved in “anti-competitive conduct” to a degree not seen since Bill Gates, one of Microsoft’s founders.
“This lawsuit is without merit and we will vigorously defend ourselves,” Joe Osborne, a spokesman for Facebook’s parent company Meta, said late Thursday.
The lawsuit is the most recent antitrust challenge for the world’s biggest tech companies. Facebook, Google And Apple All have faced lawsuits from rivals over the years, accusing them of copying their technology or buying them to crush them.
The lawsuit also adds to the crisis for Facebook, which was renamed Meta last week. The Federal Trade Commission has sued the company, accusing it of violating antitrust laws by holding a monopoly on social networking through its acquisition of Instagram and messaging app WhatsApp. The social network has also been under intense public scrutiny after a former employee, Frances Haugen, described how the company’s platforms have been used to spread misinformation, hate speech and conspiracies.
Still, Michael Carrier, a professor at Rutgers University’s law school, said the standards for antitrust litigation remain high.
“Showing a monopoly is hard,” he said. “The turmoil in the political landscape is not necessarily about how the courts govern.”
Phhhoto was founded in 2012 and the app was launched in 2014. People used it to edit photos and join images together into looping videos. It became buzzy and was promoted by celebrities like Beyoncé, Miley Cyrus and Katy Perry.
After Zuckerberg downloaded the app in 2014, Instagram founder Kevin Systrom and senior managers at Facebook and Instagram followed suit, according to the suit.
In February 2015, Facebook’s strategic partnership manager, Brian Huren, reached out to the founders of Fuhuto to discuss a “platform integration opportunity,” according to the suit. Huren offered to integrate FaHoto into Facebook’s News Feed, the suit says, on the world’s largest social platform, which was the premier real estate firm.
But “Facebook took the photo along for months without making meaningful progress on the alleged integration,” the suit says. Huren told Photo that Facebook was “hanging on some legal negotiations,” the suit says.
On March 31, 2015, Instagram changed its settings so that photo users could not find their Instagram friends. When Fohoto reached out to Facebook about the issue, Huren told them that “Instagram was clearly upset that Fohoto was growing in users through his relationship with Instagram,” according to the suit.
Photo’s founders decided to move forward with Android version of their app, which was only available on iPhones. But on October 22, 2015, hours before Photo launched its Android app, Instagram unveiled a product that, according to the suit, was a “Slash clone” of Photo.
The suit states that Instagram introduced other changes in March 2016, reducing the visibility of the photo’s content. Foto’s founders discovered the change when one of them posted two videos to Instagram, one via their photo-linked account and the other through a new Instagram account they had opened. Although the second account had a fraction of followers, the video was viewed and liked more than similar videos posted on the account linked to the photo, according to the suit.
According to the suit, the photo closed in June 2017 due to “lack of investment or any other means of remaining viable”.
This article originally appeared in The New York Times.
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