Instagram fans delete accounts as Facebook announces takeoverDale Wright
Facebook shocked the world yesterday by announcing a $1 billion dollar takeover of photo sharing app Instagram. It’s the first time Facebook have purchased another start-up, and could mark a new direction in their mobile photo sharing services.
Originally only available on the iPhone, Instagram recently caused some controversy among hardcore users by opening up its service to Android phones too. The move was almost certainly a key factor in Facebook’s decision to go ahead with the sale, particularly since Facebook’s own mobile apps have never been well received. Some estimates place the total number of Instagram users as high as 50 million.
Instagram makes no money, much like YouTube when Google bought it at the end of 2006. It has no ads and doesn’t charge for the app, and has relied on investors for income. With only a handful of staff and a previous valuation of $500 million, Instagram’s directors and shareholders are set to reap the rewards of the $1 billion takeover. Mark Zuckerberg has effectively doubled the value of their company overnight. The CEO, Kevin Systrom, is 26 years old and previously worked for Gmail. He also turned down a position at Facebook before it hit the big time, but now holds an estimated $400 million in stocks and cash.
Tech industry analysts are still speculating about the massive price tag; their best guess is that Facebook want to head off competition from the social photography app which has become a ‘safe haven’ for people who don’t want to share pictures on Facebook. Those users are the ones expressing disappointment in Instagram for becoming a part of the social network they were trying to escape, and some hardcore Instagram fans are now deleting their accounts in protest. Mark Zuckerberg has stated that Instagram will not change as a result of the takeover, but only time will tell how Facebook plan to make use of the millions of photographs they now have access to.
How do you feel about Facebook buying Instagram?