Facebook announced yesterday its acquisition of Instagram, the popular mobile application that turns pretty much anyone into a decent photographer with its user-friendly filters, easy sharing features and overall hip design. The price tag for this transaction: $1 billion in cash and shares! Of course, the blogosphere went ballistic, while traditional media and social media pundits will be analyzing this transaction in coming days to better understand how it plays out in the bigger scheme of Facebook’s coming IPO, which some value at $100 billion. So why should we care about this transaction? 
THE GOOD
1. Facebook is investing in mobile
With over 845 million users and counting, Facebook is the clear leader in the social media sphere. It is said that almost 300 million access their account through a mobile device. With the acquisition of Instagram, Facebook signals its intent to pursue and push more heavily in this direction, with increased shareability features
2. The importance of visual sharing
Photo-sharing is probably only second to video-sharing, yet it’s a lot easier, faster and requires less editing or tech savvy to achieve. Google bought Youtube back in 2006 so this seems to be Facebook’s reply. In the travel industry, both photo and video sharing are the essence of the experience, so this recent transaction will have considerable impact depending on how Facebook integrates the newcomer into its overall equation. (I personally doubt it will kill the application like it did with Gowalla after its acquisition late 2011. Gowalla lacked the traction and market leadership Instagram presently holds. Oh, and it didn’t cost $1 billion to acquire!)
3. Increased shareability
Even though Instagram was already part of Facebook’s open graph and you could post your pictures directly to your Facebook account (along with Twitter, Flickr, Tumblr, Posterous and Foursquare), it was not a fluid integration. People comment on your Facebook page or directly on Instagram, but there were no ways to combine or link. A more streamlined approach will ensure maximum sharing and optimize measuring effectiveness on pictures posted. One would think it will also allow for a greater reach with Facebook users’ average 130 friends instead of keeping within Instagram user base, which was a little over 30 millions users as of last week.
4. Social media integration
While this is certainly something Instagram users will fear, being a part of the Facebook family should increase the odds of seeing a better integration through the development of an API with third-party aggregators such as Hootsuite, Tweetdeck or Seesmic. For many experts, Facebook will gradually become the launchpad for such applications to bloom into success, thus giving value to both the application itself and the platform it uses to perform, i.e. Facebook.
THE BAD
1. When will this bubble burst?
Before launching its application for Android last week, where it saw over 1 million downloads within the first day, Instagram had a little over 30 million users that had downloaded its application from the Apple store. This company, while hot and trendy – heck, even Barack Obama opened up an account earlier this year – is less than two years old and has not turned in a profit yet. And it gets $1 billion in cash and share from Facebook? Insane.
This tends to confirm those who suspect this bubble will burst sooner rather than later. Groupon, anyone?
2. Smaller players will have a hard time striving
Back in January, TNW published this post called Facebook is killing local social networks around the world and this recent acquisition reminded of the subject. Seems like any interesting start-up will now be gobbled up by either Facebook, Twitter or Google in the relentless quest for social media domination. If I had to place some bets, I would put a few dollars on Pinterest as the next big acquisition target…
3. How will Google+ and Twitter react?
As an independent application, Instagram had all the leisure of playing around and court as many partners as possible to leverage its user-friendly interface. But now that it has chosen to “get married”, how will it affect its adoption by other platforms? Personally, I believe growth through Facebook audience will more than counter this negative aspect, but it will be interesting to see how it plays out in coming months as the battle between social media powerhouses gets more intense.
4. How will users react?
Already, there is tremendous amount of buzz and resistance to this announcement, with users reacting by disconnecting from Instagram. Mashable even ran a post titled Deleting Your Instagram Account? Here’s How to Save Your Pics. While I can see many of the trailblazers and early adopters leave the boat, like with many similar acquisitions made in the past I believe a majority of users will stick around and the application will gain traction within the enormous audience of Facebook users, many who were probably unaware of the existence of this application until today.
One sticky issue that may become a central point over coming days: privacy concerns over who owns pictures taken, and how terms and conditions will evolve now that Instagram is a part of Facebook. It will be an interesting conversation, worth a thousand words… or a billion dollars, right?
How will this recent turn of events impact the way you were using Instagram? If you use it for your brand, do you foresee a change in how it will interconnect with Facebook pages? Leave a comment in the section below and share your thoughts.
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