Some big acquisition news – Facebook has bought up Instagram for no less than $1 billion in cash and stock.
The amount Mark Zuckerberg has paid shocked many industry observers, mainly because the mobile photo sharing app with a social focus isn’t seen to be worth anywhere near that sum.
Granted, Instagram’s explosion in popularity has been a more than impressive one, shooting to a user base of 27 million just on iOS alone – and the recent launch on Android pushed those numbers up further, very quickly.
But even so, the photo app was rumoured to be worth around more like $500 million at best – and many jaws loosened at that punted valuation, let alone the doubled up amount Facebook has forked out for it.
So why the big splurge of cash? That’s the question on the tech world’s lips this morning.
Zuckerberg wrote in a blog statement: “This is an important milestone for Facebook because it’s the first time we’ve ever acquired a product and company with so many users. We don’t plan on doing many more of these, if any at all. But providing the best photo sharing experience is one reason why so many people love Facebook and we knew it would be worth bringing these two companies together.”
As Om Malik of Gigaom argues, Facebook was essentially frightened of the success and swift rise Instagram was enjoying, and felt it was a genuine threat to Facebook’s future, attacking the mobile avenue where the social network is weakest.
We – and others – agree that Facebook likely only acquired the company as a defensive measure. And there’s always the possibility that Zuckerberg could strip out the best facets of the mobile app to integrate with the social network, and shut the outfit down.
Although Zuckerberg is saying this won’t happen, and that Instagram will be kept on as it is going forward, he’s unlikely to say anything else at the moment.
Zuckerberg wrote: “We believe these are different experiences that complement each other. But in order to do this well, we need to be mindful about keeping and building on Instagram’s strengths and features rather than just trying to integrate everything into Facebook.”
“That’s why we’re committed to building and growing Instagram independently. Millions of people around the world love the Instagram app and the brand associated with it, and our goal is to help spread this app and brand to even more people.”
“We think the fact that Instagram is connected to other services beyond Facebook is an important part of the experience. We plan on keeping features like the ability to post to other social networks, the ability to not share your Instagrams on Facebook if you want, and the ability to have followers and follow people separately from your friends on Facebook.”
As to what will actually happen to Instagram in the longer term future, that remains to be seen.
Concerning Instagram’s founders, the question is: did they sell up too quickly? While the service is clearly going places, there’s no guarantee of anything in the tech world – yet there’s definitely a guarantee when a massive sum of money is waved under your nose. Given the offer Facebook put forward, it’s not surprising they cashed in their chips.
Meanwhile, many Instagram users aren’t too happy, and there are already dark mutterings of deleting accounts. They clearly don’t believe Zuckerberg’s assurances and commitments for taking the service forward – or just don’t want to be associated with Facebook and its data mining in any way, shape or form.
Ultimately, the move shows a shift in Facebook’s philosophy, and a realisation that the mobile browsing world is becoming increasingly popular as the spread of smartphones continues. It’s an area the more desktop-centric social network needs to work on, and if anything, this is certainly an acknowledgement of that fact.
Source: GigaomLeave a comment on this article