Column - Instagram: Facebook’s billion-dollar insurance policy
Published: Friday, April 13, 2012
Updated: Friday, April 13, 2012 03:04
As many people may have heard Monday, social network front-runner Facebook bought mobile photo-sharing service Instagram for $1 billion.
Many are shocked because Instagram is only two years old and consists of only 13 staff members. Its 30 million users upload five million photos a day, but Instagram doesn’t even have an interactive website – just links to download its app.
What could Mark Zuckerburg, CEO of Facebook, see in a company with no revenue and hardly any staff? Is Zuckerburg trying to escape the hole he’s dug for himself in the past with Facebook users while advancing in the world of social media at the same time? Was it a smart move to make?
It’s not completely about what Instagram has, but it’s what Zuckerburg sees Facebook lacking – a prosperous relationship with smartphones.
Instagram took a simple behavior – sharing photos among friends – and made it a day-to-day utility that people want. Facebook has lost its mojo in regards to photo sharing.
Instagram allows a user to take a photo from a phone, apply a filter and post it to Facebook, Twitter, Flickr, Tumblr, Posterous or Foursquare while allowing an asymmetry in the network, like Twitter, to choose who you follow and others to decide whether to follow you. With all of these options made available, Instagram didn’t support advertisements or sell its users’ data, which Facebook has been accused of profiting wildly from in the past.
According to CNN, 25,000 Instagram users accessed Instagram’s service, Instaport, within six hours to pull photos prior to the takeover, due to accusations about user privacy.
Aside from the possibility that Zuckerburg wanted to rekindle a dying flame with photo-sharing to cater to new and old users through a new medium, the actions taken to cement his position in social media over rivals surely had to play a part.
Smartphones, which are inherently social, are taking over. Facebook rules the social world right now, but that’s a flimsy hold and Zuckerburg knows that. Facebook was born on the desktop, which initiates a huge risk, leaving Facebook to take advantage of the coming shift to mobile.
Facebook barely makes any money from its mobile form, aside from having numbers of people who only access it that way. Obtaining Instagram makes a way for Facebook to pull itself into the future of social that’s in the midst of developing. Although they may have not gained a single extra user, they’ll all inevitably be tied tighter to the biggest network.
Buying Instagram not only eliminates a rival, but it also gives Facebook a technology that is receiving relentless adoration and exposure. Along with Instagram, Facebook is also diminishing another rival. Google, also born on the desktop, has been desperately attempting to hinder smartphones as its domain through Android software.
Buying Instagram, which doesn’t offer a Google+ sharing option, could have given Google a way to draw in the users, primarily photographers, who have made Google+ a "big hit". Well, that door’s been closed.
Pictures were the heart to Facebook’s success – the easy sharing made it stand out against early rivals. Today, it is the largest photo-sharing social network website in the world – with nearly 850 million users uploading 250 million photos per day. Combined with Instagrams mobile appeal and careful integration on Facebooks behalf, the move made sure Zuckerburg will prosper. In a sense, it makes as much sense as Google buying YouTube for $1.6 billion in 2006 before the importance of web video was made obvious.
The path to dominance has been cleared and Pinterest, arguably the worlds fastest growing social network, may be put on the backburner.
I hope Zuckerburg doesn’t throw a curveball later down the road by trying to incorporate brands and advertisement into his new extension like he did with Facebook. He’ll have to tread lightly as Intagram users are a passionate group who already worry their app will end up in dismay like other clever online services have, swallowed by tech brutes like Google and Yahoo – pushed to the side, forgotten and then deleted.
Thus far, it seems Zuckerburg has played the right cards in solidifying his position while generating advancement in the ever-changing industry. It will take time for trust to be regained from users, though.
Ironically, while all this uproar is going on dealing with digital photo sharing, 131-year-old film pioneer Eastman Kodak Co. is struggling through bankruptcy courts due to their lack of execution in the face of advancing technology. Weird.