Though the news was announced last Monday, the sudden and surprising revelation of Facebook’s acquisition of Instagram continues to induce slack-jawed incredulity. At only two years old, the creative photo sharing app roped in an astounding $1 billion, forty percent of which will go to the company’s CEO. This is certainly not Facebook’s first strategic buy, but it has puzzled many who wonder if a company with no means of monetizing its user base is really worth the staggering sticker price. The answer, in a word, is maybe.
Despite some initial reactions, I think it’s safe to bet that this is not another Gowalla or Beluga style snuffing. Facebook has swallowed or shuttered its share of promising companies, but you don’t spend this kind of money to simply quash competition. Facebook’s goal (as I read it) is to catapult itself into dominance in the mobile market, something it has struggled for years to accomplish. Despite countless versions, refinements and full reconstructions, Facebook’s mobile app continues to flounder. In fact, most mobile users simply use their phone’s web browser and avoid the app all together. With the infusion of new talent from Instagram, we can expect to see some major improvements to our mobile Facebook experience.
Further, Facebook’s billion also purchased access to a massive (and rapidly growing, with a bump of over 30% in just 10 days) group of engaged and devoted users. This fact did not escape Instagram devotees, whose reactions have ranged from dismay to dread. Just hours after the announcement, Mashable posted a walkthrough to help user extract and save their Instagram photos before cleaning out and closing their accounts.
The fear is that Facebook will use location data to target ads at users. There’s a good chance this will occur at some point, but that doesn’t change the fact that Instagram is still the best photo sharing app out there. Besides, how long could the free ride last? With no plan to monetize and with filtered photos still not being accepted as a means of paying bills, employees or investors, the service was destined to change.
If Facebook can manage to harvest the talent from Instagram without alienating the base, this acquisition could prove to be an important turning point for Facebook's mobile experience, and a major milestone in social media.
So what do you think? Is this just the beginning for Instagram, or the beginning of the end? Let us know in the comments.