Facebook Acquires Itself

The talk of the Web this week was Facebook’s $1 billion acquisition of 1.5-year-old photosharing service Instagram. Many were left scratching their heads at the price paid for a service that, while growing fast, had yet to generate any revenue. It is the type of move that some see as Facebook playing defense and exposing its weaknesses. 360i’s vp of emerging media David Berkowitz argues the social behemoth purchased Instagram because the company moved away from its core competency of photo sharing. When 70 percent of Facebook behaviors are centered on photo sharing, it’s no surprise.

There shouldn’t be any question why Facebook acquired Instagram, or why it paid so handsomely for it. Sure, Instagram’s acquisition price was more than twice what was paid for a dozen other photo-sharing startups combined over the past fifteen years. Instagram isn’t just any photo-sharing site, though. It attracted 30 million users for its iOS apps alone, before a successful Android launch just days ago. Beyond any numbers and superlatives, what Facebook’s executives must have realized is that Instagram should never have existed. This should have been Facebook’s photo application all along. Facebook has more than 400 million mobile users, and any of them using a smartphone has to grapple with subpar photo sharing. Once Instagram fully integrated with Facebook, it became even more obvious that Facebook was far behind. As Business Insider put it, “Without photos, Facebook is toast.”

Read the full post here at Berkowitz’s Marketers Studio. Follow him on Twitter @dberkowitz.


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