Time and again, the users of free online products and services cry ‘foul’ the moment their favorite gizmo is acquired by an 800-lbs industry gorilla.
The news about Facebook buying photo-sharing app and web site, Instagram, for a billion dollars in cash and stock was met by frustration by many.
The truth is, when the service or app are free, the real product is its accumulated user base. When Flickr was acquired by Yahoo for a measly $35 million, the same reaction ensued. Flickr had 50+ million users at that time.
Facebook spent one billion dollars out of the many it can spent, for a core service used by a small portion of its members. They could have built their own image manipulation and sharing app for considerably less, but by buying Instagram Facebook reaches out to a large pool of Internet users, that potentially don’t use Facebook.
For the 30 million users of Instagram, it’s clear that they are now integrated into Facebook, whether they like it or not.
Speak Your Mind