The One Billion Dollar Question
20 Apr
In case you haven’t heard, Facebook bought the photo sharing app Instagram for one billion dollars in cash and stock earlier this month. That’s right – One. Billion. Dollars. After you get past the initial sticker shock of this deal, the question remains: what was Facebook’s motive?
There are a lot of theories floating around. Some think that Mark Zuckerberg, Facebook’s 27-year-old CEO, made the acquisition because he wanted to beat Google to the punch. Instagram was growing at such an incredible rate; it was only a matter of time before someone made an offer.
It has also been said that Facebook had a very similar mobile photo sharing app in development last year. If you have that much money to spare, why not save yourself the trouble and buy a better one with a huge (and growing) fan base?
Zuckerberg had this to say about the acquisition:
“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.”
Translation? Facebook was scared. Zuckerberg felt that Facebook finally had some serious competition, at least in the mobile photo sharing realm. Instagram boasted 30 million users, and that was before the app was made available for the Android.
It’s a known fact that mobile photo sharing is Facebook’s weakness. It also just happens to be what Instagram is all about. Personally, Instagram is the app I use most on my iPhone. It allows you to effortlessly transform your photos into art and has millions of users hooked.
I think this was ultimately a smart move for both parties. It was definitely a risky (and seemingly impulsive) acquisition. Although they paid twice what the company was valued at, hopefully Facebook will reap the benefits in the long-term.
I guess if you can’t beat them, join them. Or buy them.














