- The founders of Phhhoto filed an antitrust lawsuit against Facebook's parent company, Meta.
- The suit accuses Facebook of cloning and then crushing the app.
- It "strung Phhhoto along" with the promise of a partnership that never materialized, the suit says.
The founders of a photo-app startup filed an antitrust lawsuit against Facebook's parent company, Meta, The New York Times first reported on Thursday.
In 2014, Champ Bennett, Omar Elsayed, and Russell Armand founded Phhhoto, which allowed users to take and post a short bust of photos that looped, similar to a GIF.
The Phhhoto founders said in the suit, which Insider reviewed, that Facebook CEO Mark Zuckerberg was an early user of their app, having downloaded it and posted on it in August 2014. The lawsuit said other Facebook executives downloaded the app as well.
Facebook and Instagram then "embarked on a scheme to crush Phhhoto and drive it out of business," in part by creating a "slavish clone" of the Phhhoto app, the suit said.
Meta did not immediately respond to Insider's request for comment. A Meta spokesperson, Joe Osborne, told The Times: "This suit is without merit and we will defend ourselves vigorously."
The suit said Bryan Hurren, Facebook's strategic-partnerships manager, got in touch with Phhhoto in February 2015 about a potential partnership that would integrate Phhhoto into Facebook Messenger. Hurren said in an email that Phhhoto was "really awesome," the suit said.
Phhhoto declined, but then Facebook offered to integrate the app into its News Feed — which the startup saw as a significant opportunity, as it had previously been integrated only on Instagram's feed, the suit said.
Phhhoto's founders said in the suit that Facebook "strung Phhhoto along for months without making meaningful progress on the supposed integration."
Once Phhhoto had done the technical work to prepare for the integration, Hurren told one of the founders that Facebook was "hung up on some legal conversations," the suit said.
The suit said that in March 2015, Instagram unexpectedly cut Phhhoto off from its "Find Friends" feature. In a call with one of the founders, "Hurren explained that Instagram was apparently upset that Phhhoto was growing in users through its relationship with Instagram," the suit said.
The suit also said that in October 2015, hours before Phhhoto was set to announce its launch on Android, Instagram announced the launch of its own looping-photo feature, Boomerang.
Phhhoto shut down in June 2017, the suit said.
"The actions of Facebook and Instagram destroyed Phhhoto as a viable business and ruined the company's prospects for investment," the suit said.
Facebook has faced intense scrutiny from lawmakers over how it approaches competition with smaller rivals. Emails released in 2020 as the result of a congressional investigation showed that Zuckerberg had said months before Facebook bought Instagram in 2012 that Instagram "can hurt us meaningfully without becoming a huge business."
In December 2020, Facebook was hit with two antitrust lawsuits from the Federal Trade Commission and 48 attorneys general, both of which accused the company of hurting competition by buying up or stifling smaller competitors. A federal judge dismissed the FTC's case in June, saying it failed to demonstrate that Facebook was a monopoly.
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