Why Facebook is buying Instagram

The small company's online photo-sharing application is about as easy as it gets, and it was becoming a social network of its own.

By Kim Peterson Apr 9, 2012 2:23PM
Facebook is on the verge of one of the biggest IPOs in recent history, yet it still had some time to work on a $1 billion acquisition.

The social network is buying Instagram, a photo-sharing software company, in a cash-and-stock deal that is its largest acquisition so far. And the move is a smart one.

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Instagram has been a phenomenon over the past couple of years. Users can't get enough of the digital filters it easily applies to photos taken with phones and other mobile devices.

What a story for Instagram, the free application that is just a couple of years old and already has 30 million users. Apple (AAPL) named Instagram its top application last year, saying it made it "near-impossible to take a bad shot."

Facebook will allow Instagram to run on its own, The Associated Press reports. And Facebook won't get in the way of competitors, such as Twitter, that want to display Instagram pictures.

"We need to be mindful about keeping and building on Instagram's strengths and features rather than just trying to integrate everything into Facebook," Facebook CEO Mark Zuckerberg wrote in a post announcing the deal. "That's why we're committed to building and growing Instagram independently."

Facebook has had its eye on mobile photo sharing for some time now. In its current setup, sharing phone photos on Facebook is too time-consuming and complicated. Instagram is about as easy as it gets. Rather than try to develop a competing service, Facebook thought it was easier to just snap up Instagram.

And as TechCrunch points out, with 27 million users on Apple's iOS platform alone, Instagram was becoming a social network of sorts already. Instagram didn't have much revenue to speak of, but it was on track to get 50 million users. "And with that kind of momentum, Facebook felt like it had to move -- fast," Josh Constine writes.

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Apr 9, 2012 3:00PM
Facebook has clearly made the transition from its original vision of providing the "social glue" that binds other web-based services together, to directly providing web-based services of their own.  Now they will get a real taste of what it is like to play in the same pond as the real consumer web service providers -- Google, Apple, Amazon, Microsoft.  Even Yahoo! and AOL have more track record and success in consumer web service delivery than Facebook.  Facebook is the unproven newcomer.   It will be interesting to see how Facebook fares in this new role -- the competition is strong and hungry, and the pond is only so big.
Apr 9, 2012 4:38PM
Facebook knows it is just a fad and will eventually go out of style and become obsolete.   It is obviously attempting to reinvent itself.   Anybody who buys facebook stock at the IPO is a complete fool.  Zuckerberg is taking what he can from the fad before it dies.  Too bad Instagram sold, I would love to have seen Zuckerberg sweat.
Apr 9, 2012 7:01PM
Facebook will be aol in 5 years.SmileWhy don't they buy kodak also and lots of other companies?
Apr 10, 2012 10:46AM
we in socialmediadvertise.com will buy facebook for $1 at the end of this year
Apr 10, 2012 3:32PM

I think coke should pay the family the money  they have the stock saying they own it .so coke should pay  them this is anothe example the rich want to say that way and they do not care

about middle cllass and they want it to keep it that way

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