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The deal was described as one for a company ‘with lots of buzz but no business model’
arindam arindam 16 Apr, 2012
The deal was described as one for a company ‘with lots of buzz but no business model’
Last week, social networking giant Facebook bought Instagram, a free photo sharing application, for $ 1 billion in cash and stock. It’s no surprise as most FB users are Instagram addicts, as the application allows users to take pictures and then applies a digital filter to it (before you can share it on any social networking site), giving your picture a cool retro touch.
Kevin Systrom and Mike Kreiger are the brains behind this app. The Instagram story began in San Francisco when it was launched on Apple’s app store in October 2010. In 2012, it was launched on Android phones before it finally got picked up by Facebook. The deal was described as one for a company ‘with lots of buzz but no business model’ and has been compared to Yahoo’s $35 million deal with Flickr. Mark Zuckerberg has said he wants it to “develop independently” and has hired Instagram’s 12 employees as well. But people have greeted that assurance cynically. As CNNMoney.com put it, Zuckerberg’s pious claims of wanting it to develop independently are contrary to Facebook’s ‘common practice of buying hot start-ups, killing their products, and re-deploying their staff on other projects’.
But Zuckerberg does know a genius idea when he sees it. Instagram had announced that almost 100 million pictures had been uploaded on its service by July 2012, and in April 2012, it had announced that there were 30 million accounts on the application. Besides, Facebook has said in the past that photos are a vital part of its network.
There is a theory that Facebook bought the app because it got spooked by the new ‘it’ thing. In a world where whimsical audiences decide what the app of the moment is, it is believed that Facebook may not have wanted competition. What better way than to buy it out? After all, it’s a good practice to keep your enemies close.
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