Instagram and Facebook Merger
Most Internet users have come across the square, polaroid-style photos on news feeds everywhere, if not even posted some themselves. The Instagram craze is sweeping online communities everywhere, and offers an easy and trendy way to share mobile photos in a social networking environment. Instagram allows users to snap a picture, edit the image with various filters, and then share it on their profiles or more recently directly to social media giant Facebook.
The application is available for iPhone and Android phones, and has reached the 100 million registered users milestone in January 2013. Its success is especially interesting as Instagram is a fairly new presence online, not even three years old, and its founder Kevin Systrom had no real business plan at launch.
However it has attracted the coveted attention of Facebook founder Mark Zuckerberg, who negotiated a deal with Systrom to purchase the app for $1 billion and add it to the Facebook family in 2012. As Zuckerberg’s offer consisted of $300 million in cash and almost 23 million shares, the total value of the deal was affected by Facebook’s IPO and subsequent stock devaluation. The merger was finally valued at around $747 million, and Systrom remained on board and even announced the decision on his Facebook page, saying he was “psyched” by the events.
The deal proved to be slightly controversial as both the Federal Trade Commission and Office of Fair Trading were weary of the impact of the merger on the market. After a number of interviews and hearings, it was concluded that there is no shortage of photo editing apps for mobile phones and the merger will not create a monopoly. Many technology bloggers and journalists remarked that apps like Instagram belong close together with already established social networks, so it remains to be seen exactly how Facebook will make use of Instagram in the future.