Facebook Acquisition of Instagram: Good Buy or Bad Buy?

Editor’s Note: It’s been in the news for a while, and perhaps what’s keeping it there is the amount of value transferred from Facebook’s account to Instagram. @DaTecNerd broke of how Facebook acquired Instagram for a whooping USD$1Billion, @amorebise then gave a caution to techies not to daydream and get distracted. Even @seyitaylor shared his views on Why Instagram Can’t Be Built in Nigeria. Well, here’s another opinion, but this time, it’s from a ‘purchase’ point of view. The question: Good buy or Bad buy?

Facebook raised the stakes in its war with Yahoo! over online image control by buying photo-sharing app Instagram for $1billion on Monday night. Its chief executive Mark Zuckerberg announced the surprise £630million purchase – his company’s largest ever – as a ‘milestone’. But he also provoked a backlash from Instagram fans accusing the service of ‘selling out’ amid fears Facebook will now use its newly acquired data to target them with advertisements.

Two-year-old Instagram, based in San Francisco, is a social network built around mobile phone photos, with nearly 30 million users. The service allows users to customise photos by adding special effects and then share them with friends who can ‘Like’ or comment.

Zuckerberg said Facebook would build on Instagram’s best features rather than simply integrating the service. He added that Facebook planned to keep features such as being able to post to other social networks.

‘This is an important milestone for the company because it’s the first time we’ve ever acquired a product and company with so many users,’ he said.

Kevin Systrom, the CEO of Instagram, said:

‘It’s important to be clear that Instagram is not going away. We’ll continue to add new features to the product and find new ways to create a better mobile photos experience.’

However, looking at the financial books, the question still remains is this a good acquisition by Facebook or a bad buy?

Definitely a cash out for Instagram who have not recorded any profit since its inception. For me, Facebook who currently has registered users in the hundreds of millions purchased the users of Instagram and the brand as against a product & service. Also from where I stand, I think USD$1Billion is to much to pay for all that Instagram, with less than 20 workers, has to offer.

Among many things, many Instagram users went on to Twitter to share instructions on how to delete their accounts as they think this is a complete sell out. Nevertheless, I would say thumbs up to Kevin Systrom and his team for the idea and for the traffic they were able to generate.

Image credit


Comments are closed.