You may know, by now, that Facebook has acquired Instagram, the social photo editing and sharing app for iOS and Android, for a cool billion dollars. Some see this as a brilliant move, but I think it more resembles a move of desperation, possibly combined with some skillful bidding inflation by Google. Instagram creates a social layer outside of the usual social networks, but also integrates sharing features for them.
Whatever else may be said about Instagram, it isn’t worth a billion dollars, and it won’t be a matter of waving a magic wand for Facebook to make it worth that when they can’t even make their own mobile app worth anything (or at least, not yet).
Google didn’t have to worry that Instagram would cost Google+ its popularity with photographers, the fact is that desktop websites remain the best places to view photographs in all their glory, and Google+ heavily emphasizes visual media in its experience, now more so than ever.
However, Instagram did have valuable data and mobile mindshare, and at the right price Google might have acquired them. Once it became obvious Facebook was intent on having it, Google’s negotiators may have driven up the price with large counter-offers to make the final deal hurt. In fact, that’s probably exactly what they did.
Instagram may achieve lasting success as a social network run separately by Facebook, or it may prove to be an example of “viral apps”, which become popular and then fade as new things come along. Social is becoming a feature of everything nowadays, from niche social networks for fans of particular celebrities, to social networks oriented around pictures or videos, to the Xbox Live “social network” for gaming.
Mobile creates a brand new market for social that makes it especially easy for social products to go viral. With a desktop-heavy business model that has, in some ways, stagnated over the years and found its members resistant to their most ambitious attempts to make headway in established markets (email, retail, social videos, etc…), Facebook can’t afford to lose the mobile market. But they could lose, and they know it.
The Instagram acquisition amounts to Facebook buying up a billion dollar fire extinguisher and praying no new threats of the same magnitude come along anytime soon. If a new threat does emerge soon, Facebook may not have the capitol to buy it out, or the success in mobile to crush it.
Shotgun weddings are done out of urgent necessity, and in this case the reluctant groom is set to marry his blushing bride and her tens of millions of users for a steep Bride Price, though for now they are to remain at her house and carry on with business as usual. After all, he needs to get his own house in order first and earn back the positive opinion of some of the 42% of consumers who have a negative opinion of his brand, otherwise he might just drive them all to run away if he tries to move them all over to his place.