Facebook + Instagram =
One Big Acquisition Flop
When you boil
it all down,
Facebook is
spending $1B
for some Web
2.0 software.
I KNOW, I KNOW. Facebook’s acquisition of Instagram hasn’t even been finalized yet and I’m already calling it a complete waste of a billion dollars. How can I say that? Easy. Let’s look at the facts, shall we? Facebook paid about $28 for each of
Instagram’s 35 million users. As such things go, that doesn’t seem so bad
Steven J. Vaughan-Nichols has been
writing about
technology and the
business of technology
since CP/M-80 was
cutting-edge and
300bps was a fast
Internet connection —
and we liked it!
He can be reached at
sjvn@vna1.com.
— as long as Instagram’s users stick around. But
the reality is that faithful fans of the photo-sharing
program are royally ticked off by the deal. Those
who are frantic to get their pictures out of Instagram before Facebook takes over may well be wary
of Facebook’s lousy privacy record. If you don’t
want your Instagram photos used in Facebook ads,
you’d better make sure you have your privacy settings adjusted properly — and then hope Facebook
doesn’t change its privacy settings yet again.
Moreover, $28 per user is cheap only if Instagram’s users aren’t already Facebook users. In its
pre-IPO S1, Facebook claims it has 845 million
active monthly users. I strongly suspect that
there’s a good deal of overlap between that
845 million and Instagram’s 35 million.
So when you boil it all down, what Facebook
has really bought is some Web 2.0 software for
tweaking pictures. I haven’t programmed in years,
but I bet I could put together a team of developers,
whip up an Instagram clone, and launch it on the
Amazon Elastic Compute Cloud over a weekend.
This is not rocket science.
Mind you, I’m not sure that Steven’s Instagram
would be worth even the six figures it would cost
to build. Today, Instagram’s cutesie photo filters
are popular — but they generate no revenue. Tomorrow, they could be as passé as Pet Rocks.
Here’s what will happen: Facebook won’t see a
noticeable increase in users. And Instagram fans
who loathe the idea of Facebook getting its hands
on their images will move to another platform.
