Many too many words will be written about Facebook’s $1bn acquisition of Instagram today, but these are mine…
First up, hearty congratulations to the Instagram team. I’ve long held them as one of the most successful examples of a “minimum viable product” — there are many things missing from Instagram (easy-access archives, for one), but the core product they built was simple, compelling, and worked incredibly well for one goal - making mobile photography fun. That they did most of it with a team of six or less people is even more impressive, and they deserve their payday, enormous as it is. On which subject…
One Beelion Dollars!
Expect many words about how this confirms a tech bubble, how the valuation is overblown, etc etc. The fact is that, as much as anything, the value Facebook has placed on Instagram today is an indication of how seriously they’re determined to become the pre-eminent photo-sharing experience online.
Of course, having worked there for four and a half years, I’m inclined to see Flickr as their primary competition, but I can’t really identify a worthier contender. Photobucket has a lot of images, sure, but they’re little more than a dumping ground for fourm-posters. And the other Flickr-modeled contenders (Smugmug, 500px) are a drop in the bucket in terms of images and engaged users.
Flickr has also had a persistent weakness in the mobile area, one that still hasn’t been rectified. Owning Instagram gives Facebook an enormous leg-up in this area.
What will become of Instagram?
In his post on the acquisition, Mark Zuckerberg states:
…we’re committed to building and growing Instagram independently. Millions of people around the world love the Instagram app and the brand associated with it, and our goal is to help spread this app and brand to even more people.
Simultaneously, he admits
…it’s the first time we’ve ever acquired a product and company with so many users.
I am extremely sceptical that maintaining a separate brand is in Facebook’s corporate DNA. Everything they do and every cent they make is dependent on things tying back into their users’ timelines (nee walls). I suspect that this driving force will win out over a desire to maintain the separate brand — even at Yahoo, a company with far more experience of running separate web properties, maintaining the separate brand of Flickr was, for many years, a struggle.
I think it’s likely, once the dust settles (we may be talking a two or three year time-horizon), that one of two things will happen:
- The “Instagram” brand will persist, but the product will effectively be mothballed or “maintenance-moded” while the Instagram team is tasked with building a Facebook Mobile Photos platform/product.
- The current “separate brand” conviction will evaporate entirely, and Instagram will be subsumed into Facebook Photos.
What will become of Flickr?
As I already said, I see Flickr as Facebook’s primary competition in the photos space, and I suspect they do too. Flickr is going to be faced with a renewed aggressive competitive stance from Facebook.
I was deeply puzzled last week by some of the claims in Facebook’s patent counter-suit against Yahoo. A great deal of the claims were focussed on Flickr, and many of them were nonsensical given that the two products launched simultaneously, and many of Facebook’s patent filings are dated later. Claiming that Flickr’s photostream violates Facebook patents is pure bullshit by just about any measure. Here we start to dive into conspiracy theory territory, but Zuckerberg and Facebook are definitely capable of fighting dirty, and in the light of the Instagram acquisition the patent filing makes a little more sense to me.
I won’t be surprised if Facebook pushes hard for temporary injunctions against certain aspects of Flickr’s product, even if they believe internally that the eventual outcome will be invaidation of some of their patents based on prior art from Flickr itself. A success, even a fairly brief one, in this area, would throw Flickr into disarray, providing some useful “air cover” for Facebook’s integration of Instagram.
Nevertheless, Flickr still has a dedicated, capable team, and I hope they come out swinging. Flickr has always tried to do things “the right way”, and this is still their biggest strenth. If I had to trust my privacy with one of the two, I’d pick Flickr over Facebook every single time, and Facebook’s disregard for privacy in the face of profit may yet be their undoing.
For my money, I’d say Foursquare’s nominal valuation kicked up a notch today. Zuckerberg appeared to be trying to damp down any valuation-froth off the back of this acquisition by stating “We don’t plan on doing many more of these, if any at all”, but that doesn’t entirely convince me.
Facebook is certainly interested in the location-checkin space — they have a product for it, but it’s languished somewhat, and I don’t know many people who use it much, if at all. The Instagram acquisition signals an interest in both photos and mobile, and Foursquare really are owning the mobile checkin space. As a user of Path, I’ve been impressed by the ease with which their photo-posting flow allows you to simultaneously tag a location, and it seems like a similar approach could be a natural fit for Facebook/Instagram.
“May you live in interesting times” goes the hackneyed old probably-not-actually-a-Chinese-curse. Whatever the origins of the phrase, the tech industry right now is definitely interesting.