Since the news of Facebook buying Instagram for $1billion broke a little under 48 hours ago, every tech commentator and his dog have chipped in their thoughts. On the off chance that you haven’t had enough opinions, here’s mine.
On the whole, I think this is a good thing for Instagram. I know Facebook’s acquisitions tend to get subsumed (like Gowalla) or pretty much abandoned (FriendFeed) but Instagram has a huge amount of traction at the moment. Facebook hasn’t got to where it is by making stupid decisions – well, it has made a few misguided ones but nothing critical – and managed to set itself apart as a social network when rivals like MySpace and Friendster were top. Facebook evidently sees value in Instagram – $1billion is a lot of money for a start-up with 13 employees and no obvious revenue other than venture capital funding – and it wouldn’t be in its interests to ruin it.
Right now, Instagram is riding on a high – it’s hit 30 million registered users, is currently the most downloaded free app on the iOS App Store and has had over 5 million downloads of its Android app which was only released last week. The scores of tweets from people saying they’re leaving because of the Facebook takeover, or the influx of the ‘great unwashed’ (Android users), are probably a mere drop in the ocean compared to the number of new users signing up right now.
As I said earlier, Instagram’s only income until now has been VC funding. It’s a free app, with no adverts or paid upgrades. The users do not provide any income for the service, despite them costing money in terms of server capacity, paying developers and all of the usual business expenses. This is something I mentioned in December, about how safe your data is on free cloud services – after all, if you’re not paying to use it, who is? In Instagram’s case, we now know the answer – Facebook.
I imagine that Instagram won’t change massively over the next few months. I expect users will eventually be required to use their Facebook login to access it; psychologically this may put people off but I’m willing to bet many of its users have already associated their Instagram and Facebook accounts anyway, to share pictures on Facebook. And I also expect Facebook’s photo app to gain some of Instagram’s features, like the filters. But I don’t think Facebook will shut Instagram down – it’s not like Gowalla, which had 1-2 million users at its peak (and was allegedly on a downward trend by the time Facebook bought it). To pay $1billion just for the talent of 13 people and some code would be madness. At worst, it’ll end up like Flickr has after the Yahoo! acquisition where it continues to run but with much reduced developer focus.
I hope, however, that Instagram remains a separate division within the Facebook empire, and received adequate support to keep innovating and moving forward, rather than stagnate like Flickr. Time will tell, and this may be something to revisit further down the line.