So why would Facebook blow a billion on a free app?

Unless you’ve been living under a rock (or stuck in post Easter commute), you can’t have failed to have noticed that Facebook acquired Instagram for an eye watering billion dollars. If you’re not familiar with Instagram, it’s a free photography app which has been downloaded around 30 million times. The company Instagram itself employs 13 people.

Now Facebook have stated that they intend to keep Instagram independently managed. So… why have Facebook spent a billion dollars on a company that develops a single app, and have yet to turn a profit?

Well, there are a few potential reasons:

Secure the expertise – Facebook bought Gowalla a few years ago, redeployed the staff, integrated its functionality into Facebook, and then wound down the app.

Photos – Since the advent of Digital Cameras, people have take a lot more pictures. Some would say, ‘wasted a lot more pictures’, but taken a lot more pictures all the same. In fact, Facebook has made it a lot easier for you to take and share your photos, tag your friends, even identify your friends. So, why not utilise an app that is smokin’ hot?

Mobile development – Let’s face it, Facebook is so noughties! It’s a desktop website. It’s average on tablet and whilst it’s a bit better on mobile, it’s not great. Instagram however is great on iPhone. And it’s now on Android (a million downloads in 12 hours).

The real reason – when it comes to the crunch, Facebook is in a war with Google. From a social point of view, Facebook is king, but it lags behind Google in most other aspects. By building Facebook as the place for photos, Facebook has the opportunity to map the world. By you. And you know what Mr or Ms Facebook user? You’re more likely to be predisposed towards the Facebook platform if you feel like you own the content. Not that you will by the way? Yes, you’ll contribute but don’t forget that Facebook own everything posted to the platform. Check the terms and conditions. 😉

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One response to “So why would Facebook blow a billion on a free app?

  1. Nice blog. In my view they bought instagram for one reason…to stamp out another social media threat. Instgram is a social media app, you have followers, you can comment etc. And with millions of copies downloaded within days on the android platform (a google OS) facebook had no choice.

    Similar to when Microsoft bought Skype – for one reason…to stop google buying them and instantly dominating all things voice.

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