Just hours ago, Facebook bought the popular photo service Instagram for a cool US$1 billion in cash and stock, making it one of the biggest deals for a mobile app developer of late.
This comes, of course, just before Facebook starts trading as a public company next month, when it is expected to cash in even more. That may make buying Instagram, a two-year-old company that started off creating Polaroid-style pictures for iPhone users, seem hardly costly.
Yet questions abound regarding the acquisition. Here are five that are being asked now:
Why is Facebook doing this?
The first thing that comes to mind is competition from Instagram, which in its own way, is an alternative to Facebook’s photo-sharing feature. Would Facebook allow a small startup that has grown amazingly fast in the past two years to step on its turf? It’s clear the social networking site has decided it needs to nip the competition in the bud.
Are people leaving Instagram now?
Already, there are reports that people are bringing their Instagram pictures offline for storing on their own PCs. Perhaps unhappy with Facebook’s privacy policies, some users are already seen exporting their holiday shots out of Instagram. Or maybe they are just iPhone users still unhappy with Instagram going on Android phones.
Are we back to the dot.com days?
Just last month, online gaming firm Zynga paid US$200 million for OMGPOP, the developer of the popular Draw Something app, in a bid to keep up with its rapid growth. Today, we hear of another mega-buck buyout that immediately brings to mind the crazy deals of the late 1990s bubble.
As a free app, Instagram probably won’t directly earn Facebook that cool S$1 billion back, but if the buyout enhances the Facebook photo-sharing experience, then who’s to say it is not worth that price? The answer will only be clearer when the dust settles in the coming months.
Will we still be able to share photos on Twitter?
Yes, according to what has been shared so far by Facebook CEO Mark Zuckerberg. Instagram will continue to run as an independent company, he has said, and users can still share photos on rival social media services like Twitter.
What now for privacy?
Not clear now, and the buyout will probably worry Facebook users who are wary about the company’s recent changes to its privacy policies. If indeed Instagram and Facebook are run separately and retain their independence, then there should be no change in the terms of use that consumers agree on when they sign up for each service.
Then again, who knows if Facebook would bring Instagram into the fold and impose its own terms and conditions? Would Facebook need to announce this or would it just keep quiet since you probably already agreed to Facebook’s terms when you signed up years ago?
