Unless you have been living under a rock or without an internet connection for the past 48 hours, you might have heard that Facebook acquired Instagram for the price tag of $1 billion on Monday (in a combination of cash and stock). The sale of this popular photo-sharing app is expected to close later this quarter and bring the 13-person team from Instagram over to Facebook.
Many of you may be wondering what this means for the tech vertical and one of its biggest juggernauts: Facebook.
For one, Facebook saw a very real opportunity and to a small extent a threat with the emergence of Instagram in October, 2010 and quickly moved in to get the photo-sharing app while it was still in its nascent development. Facebook, like any king atop its throne, does not like competitors who excel at its core functionalities better than Facebook does (re: Google + and its circles capabilities in June, 2011 that was quickly cloned by Facebook). Facebook recognizes that photos drive engagement and that photos are the most shared type of content on Facebook.
Facebook asserts that they will “grow the app independently” and “learn from Instagram’s experience to build similar features into other products.” In my estimation this is a bunch of hogwash. Facebook can do whatever it so pleases, no matter if Instagram’s 13 employees work for Facebook or not. I do think they will learn from and use Instagram and bake it into their current offerings. But a year from now, heck six months from now, do you really think we’ll be talking about Instagram? Nope. As for Instagram…
Instagram’s Line of Reasoning
Instagram cashed in its chips with this deal. How can anyone blame them? This seems eerily similar to 2006, when Mark Zuckerberg, then the head of a nascent social network, was offered $1 billion by Yahoo in a bid to acquire Facebook. Zuckerberg verbally accepted, only to find that Yahoo’s CEO at the time, Terry Semel, lowered his offer by 20% after Yahoo’s stock price plummeted overnight. The original deal was back on the table a couple of months later, but at that point Zuckerberg walked and the rest is history.
Instagram is in a much different position than Facebook was in, in 2006. Instagram at its core is an application, not a platform looking to take over the web (re: Facebook). Instagram understands who they are and as a result, wisely signed on the dotted line at Facebook’s behest. The timing of this deal makes sense for Facebook: pre IPO. For Instagram, not so much. They just launched their Android app last week and recently eclipsed 30 million users, nearly four times the amount Facebook boasted in mid 2006 when Yahoo offered them $1 billion.
At the end of the day money speaks and for Instagram, who two years ago was merely a college kid’s idea, $1 billion seems like an awfully nice coup.
What are Your Thoughts on Facebook’s Acquisition of Instagram?
What are your thoughts on Facebook’s acquisition of Instagram? Will this further cement Facebook’s status as one of the titans of the tech industry or will Facebook squander this opportunity to integrate Instagram and its users into its platform? Do you foresee a problem between Instagram’s users (which are mostly Apple users) and Facebook? Will these two tech behemoths play nice? We would love to hear your thoughts, please share them below in the Comments section.