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“We call Mark Zuckerberg to the stand.” Thus began Wednesday’s nearly six hours of testimony from the Meta Platforms CEO in a trial of a lawsuit brought by a young woman against several tech companies including Meta, contending that social media causes depression and suicidal thoughts. I was in the downtown Los Angeles courtroom, where Zuckerberg, sitting in the witness stand with an exit sign over his right shoulder, came across as more annoyed than threatened during intense cross-examination.
Mark Lanier, the plaintiffs’ attorney in the landmark case, who spoke with a faint Texas twang, showed the courtroom dozens of internal emails and chats from Meta employees and executives over the years debating decisions like whether to ban the beauty filters teens used on Instagram to mimic the results of plastic surgery. That’s the kind of Instagram feature central to the case, in which families with children who have had mental health problems say social media apps like Instagram are designed to cause harm. The attorney presented an email one Meta executive had sent Zuckerberg, urging him to ban the feature because it could cause body dysmorphia.
Zuckerberg, who is in his third decade of running his company, wasn’t flustered—and maybe the jury will see him as cold. “These are complicated decisions, and it’s not surprising that people disagreed on them,” Zuckerberg testified. He said it would seem “overbearing” to ban the beauty filters, and he preferred to air on the side of free expression. He added: “No product is perfect, and we want to continually improve ours to get better and better over time.”
Lanier tried to show that Instagram executives in recent years had tried to drive engagement on the app, part of the plaintiffs’ overall story that social media apps were designed to be addictive. The back-and-forth on this point got bogged down in the precise meaning of corporate terminology, to an extent bordering on absurd. As recently as 2022, Instagram executives discussed “milestones” for the company in the coming years, like increasing Instagram usage beyond “40 minutes per day” per daily active users.
Zuckerberg contended that “milestones” were not the same thing as “goals.” He said he was focused on building the company for the long term: “I’m not trying to maximize time spent in a given month or something like that.”
At one point, when the testimony turned to the question of age verification, he shifted the responsibility to Apple and Google. The “best solution,” he said, was for phone makers to collect information for app companies like Meta on which users are under 13.
Overall, the day ended with scant dramatic or revelatory moments, and the subject of the trial seemed almost out of place with the current tech obsession with AI. But the same Silicon Valley executives and employees sit behind the scenes of both social media and AI chatbots, making decisions on what their apps and algorithms prioritize for users—weighing evidence and rationalizing their choices.
And in the courtroom, Judge Carolyn Kuhl warned that people wearing smart glasses in the courtroom had to remove them and get rid of any video recordings. “You must delete it or you’ll be held in contempt of court,” she said.
Etsy Jettisons Depop
Make of this what you will. Etsy, the online marketplace for handmade goods, is selling what has been by far its best-performing business unit—at a loss! It’s unloading Depop to eBay, a rival and much bigger marketplace, for $1.2 billion in cash. That’s $400 million less than what Etsy paid to buy Depop in 2021.
Since then, Etsy has overseen rapid growth at Depop—so much so that the woman who oversaw Depop over the past few years, Kruti Patel Goyal, was elevated to be CEO of all of Etsy, effective Jan. 1. Depop had become Etsy’s growth engine—in the third quarter, Depop sales expanded 40% while Etsy’s overall sales barely grew.
Neither Patel Goyal nor Josh Silverman, the longtime Etsy CEO who became executive chair at the start of the year, had given any indication they were unhappy with Depop. Just the opposite: At an investment conference in early December, Silverman said Depop was “really cooking” and “has tremendous growth potential.” He even suggested Depop could be Etsy’s version of Venmo, PayPal’s online digital wallet, which has become a household name.
So why sell? One explanation is that Etsy’s board has become very focused on the short term. Etsy had said its third-quarter margins were hurt by a big increase in marketing spending at Depop, which would also depress the company’s fourth-quarter profit margins. Silverman was bullish about the ultimate outcome—he told the investment conference in December, “We think [the increased marketing] is going to lead to quite a lot more adoption and significantly expand the addressable market for Depop.” Maybe the marketing wasn’t paying off? Etsy reports fourth-quarter earnings tomorrow, so we will soon find out more.—Martin Peers
In Other News
• Figma shares soared as much as 16% in after-hours trading Wednesday as the design software company reported a slight acceleration in fourth-quarter revenue growth of 40%, up from 38% in the third quarter.
• DoorDash reported 38% higher revenue of $3.955 billion, thanks partly to the acquisition during the quarter of U.K. delivery firm Deliveroo.
• Saudi state–backed AI firm Humain said Wednesday it had invested $3 billion into Elon Musk’s xAI as part of a funding round in January. The investment preceded SpaceX’s acquisition of xAI earlier this month, according to Humain.
• Snap said its subscription business had hit a $1 billion annualized revenue run rate, as the number of people paying for a Snapchat+ subscription passed 25 million.
• Perplexity is no longer offering ads, an executive told the Financial Times. The AI search startup is pulling back from this line of business as rival OpenAI started showing its users ads in ChatGPT conversations earlier this month.
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