Facebook Buys Instagram for $1 Billion

By Michael J. Lockhart

Your favorite photo sharing service just found a new home on Facebook.

So it’s official: Facebook announced this morning it will acquire photo-sharing service Instagram for a nifty $1 Billion in cash and stock. While it’s a pricy tag for what some describe as a glorified photo filter, the question remains of what will Facebook do with it?

Years ago when search giant Google bought out YouTube, a plethora of social commentary emerged fearing Google would destroy the world’s favorite video sharing site. Did it? Not a chance. Google’s acquisition of the site did not stop users from posting their favorite copyrighted TV shows, creating exuberant fan personas (check out Very Mary Kate), or butchering cover renditions. So rest assured, your daily food uploads can still continue with Instagram.

The guy who invented Instagram is going to post so many black and white, deep, thoughtful photos of giant piles of money.

— Conor Lynn (@ConorLynn) April 9, 2012

Be that as it may, so-called #Facegram haters have begun popping up in droves protesting the buyout, particularly in regards to Facebook’s previous privacy concerns and how the social-media giant may use Instagram photos (read: how they plan to sell them). This has lead to many Instagram users heading for similar third-party applications instead. With that in mind, it will be interesting to see if Facebook utilizes any patents to crack down on similar software to cement its marketshare.

The service could suffer an identity crisis if Facebook decided to integrate the service as Facebook Insta-photo or similar. While at the moment Instagram CEO Kevin Systrom has taken to his blog “to be clear that Instagram is not going away,” it will take time for Facebook to create a game plan for the company.

Facebook founder Mark Zuckerberg commented that it’s in the company’s best interest to build on Instagram’s strengths, rather than integrate. We’d imagine this comes from the fact that mobile users would rather update by snapping a pic than by text, something that has been hurting Facebook recently and could be a logical avenue to expand into. With that being said, Facebook could be focusing on the future and the potential to allow Instagram users to upload videos as it keeps in-line with advancing phone hardware and network infrastructure.

Wow. The 2012 presidential election is worth more than Instagram. &mdash" rel=“nofollow”>https://twitter.com/search/%25231billion">#1billion

— Gov. Buddy Roemer (@BuddyRoemer) April 9, 2012

Instagram’s attractiveness to Facebook could also stem from the desire to compete against Yahoo!’s photo-sharing site, Flickr. If Facebook can convince enough users to abandon Flickr and head to Instagram, then we could be looking at yet another example of Yahoo!’s inability to remain relevant (the company laid-off thousands last week in a mass restructuring). On the other hand, this could be just what Facebook needs to steal back traffic from viral “photo pinning” site Pinterest.

Either way there are several competition-based reasons that could make this a smart move on Facebook’s part. This is the company’s largest acquisition to date, and while Instagram’s own financing last week valued it at a reported $500M and still growing, Facebook paying twice the value for such a young company is still a risky move. We’ll definitely be keeping track of how these two companies learn to work together, as well as what innovations they might be capable of combined.



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