Instagram's Adam Mosseri confirms ads are coming to Reels and defends Facebook's 2020 election response

Key Points
  • Instagram is redesigning its app to make Reels, its TikTok competitor, and shopping more prominent.
  • CEO Adam Mosseri confirmed ads will come to Reels eventually, and said e-commerce not only contributes direct revenue but also helps with ad relevance.
  • Mosseri also defended Facebook's response to misinformation and conspiracy theories during the 2020 election season, saying that the company is playing offense and defense.
Adam Mosseri speaks onstage at the WIRED25 Summit 2019 - Day 1 at Commonwealth Club on November 08, 2019 in San Francisco, California.
Matt Winkelmeyer | Getty Images

Instagram is redesigning the app, putting tabs for Shop and Reels at the bottom of the main navigation bar, and moving the creation (+) and notifications (heart) buttons to the top right.

The changes will start rolling out Thursday and are designed to provide more openings for Instagram to show ads and encourage users to shop for items they see on Instagram, providing revenue growth for its parent company Facebook.

The head of Instagram, Adam Mosseri, told CNBC the company will put ads in its TikTok competitor, Reels, and make it easier for users to browse for products to drive the company's growing e-commerce business. Instagram takes a slice of each transaction for purchase made through the app. Mosseri said these changes are a necessary evolution of the app to keep up with the competition and to serve its users and creators, especially in light of the pandemic changing consumer behavior.

"It accelerated existing trends and accelerated the shift of shopping from offline to online; it's increased the amount of demand there is for entertaining video out there," he said.

Ads are coming to Reels

For Reels, Instagram plans to leverage its new TikTok competitor and include a new space for advertisers.

"I think that we can leverage the story ad format because it's the same immersive experience, so that'll be helpful because you don't need to get advertisers to create a bunch of new creative [ads]," Mosseri said.

He said Instagram hasn't yet built an ad business into Reels because the company is still working on making sure the format is engaging for consumers and creators.

Mosseri also acknowledged the success of its rival, saying "TikTok gets all the credit for pioneering the space."

As for the fact that many TikTok creators simply repost their videos to Instagram, including the TikTok logo, Mosseri said he's excited every time he sees a creator stop doing that. 

"I think competition is fundamentally a good thing and it is a strong incentive for us," said Mosseri. "I think currently we're in the catch-up phase, trying to build some of the basics and the fundamental creative tools … establishing that Instagram is a place for short-form fun video. But over time, we're going to have to differentiate and innovate, and that'll take time, and right now we're just going to catch up."

Shopping is meaningful for Instagram

As for the move to highlight shopping on Instagram, Mosseri said there's "a ton of commerce or commercial activity on Instagram already," and this should accelerate the trend of people using the platform to find products.

"We should see activity on shopping activity generally go up," said Mosseri. "I think the important thing to understand is shopping is going to be meaningful to our business in a few different ways."

Mosseri said shopping revenue can come from Instagram taking a cut of each transaction and opening up space for advertisers to buy ads that prompt people to buy a product directly through Instagram. Elevating shopping on the platform can make ads more relevant. It eliminates friction between seeing an ad and being able to buy something. 

Mosseri defends Facebook's election track record

Mosseri also defended Facebook's work during the 2020 election season. The company has faced criticism, including from members of Joe Biden's presidential campaign, that it did not do enough to crack down on the spread of misinformation and conspiracy theorists.

"I'm sure we've made decisions that people disagree with on both sides of the aisle. I think that is to be expected, but at a high level we tried to play offense and defense," Mosseri said. "On the offensive side we've tried to always focus on voter turnout."

Mosseri cited the fact that across Instagram and Messenger, the company helped over 4 million people register to vote.

"And on the defensive side, we focus on lots of things with the top three: to prevent any foreign interference, which is obviously an issue that we saw in 2016, and we were not adequately prepared for," Mosseri said. "We've tried to do a lot on misinformation — you've seen us work with third-party fact-checkers and add labels and develop content and passwords and I think we got tested in a big way last week. And then voter suppression — you've seen us do a lot to take down any content that actually suppresses the vote, and we are generally hesitant to take content down unless it has real safety implications, but one of the only exceptions to that is voter suppression."

Mosseri also said he's watching the possibility a Biden administration could push for an overhaul of Section 230 of the Communications Decency Act, which would make Facebook and Instagram liable for the content on their platforms

"We have to be very careful when we take a look at 230 about what incentives we create if you remove Section 230. It creates an incentive for platforms to take a much more aggressive stance and all sorts of speech issues, which can lead to some censorship," he said.

Echoing Facebook CEO Mark Zuckerberg, Mosseri said there's still an opening to make changes to Section 230.

"We're not opposed to taking a look at 230," he said. "We're not opposed to regulation more broadly. We actually would like it if on more of these issues that are contentious we had very clear guidance from regulators on what is and what is not allowed. We don't love being in the business of making some of these types of content decisions."

Watch CNBC's full interview with Instagram chief Adam Mosseri
Watch CNBC's full interview with Instagram chief Adam Mosseri