Why Facebook’s $1 Billion Instagram Deal Is Brilliant

Meet the new boss.

So Instagram is now Facebook’s property. $1 billion in cash and Facebook stock, less than two years in business.

Pretty sweet deal for the Instagram team. But it’s also a brilliant move for Facebook.

Why?

• Not only does it now own an insanely fast-growing (and arguably, the most exciting) social network…
• …And the (tiny) team that built it.
• But Facebook just took down its no. 1 threat, too.

The biggest threat to Facebook is a mobile-only or mobile-first social network that captures the increasing amount of time spent on smartphones in a way Facebook can’t or doesn’t.

In my experience, that’s exactly what Instagram does. I’m still addicted to Facebook on the old desktop-browser web, but when I’m on my phone, I gravitate to Twitter and Instagram. Path is another example, but Instagram is more developed — that’s the deal I’d make, too.

(Personal appeal to Mark Zuckerberg: Please, please don’t ruin Instagram. I really love it. It’s different than Facebook in many good ways, and I think you’re smart enough to appreciate that and encourage those differences. I hope my faith is well-placed; Facebook is, admittedly, still pretty awesome, eight years after I first joined.)

Giving up 1% of your market cap to take out biggest threat is a savvy move.

— chris dixon (@cdixon) April 9, 2012

The other thing to think about when Facebook does anything mobile is: How does this further Facebook’s goals to become a mobile platform, not just a service?

Sure, Instagram is using the Facebook platform and APIs for a lot of its sharing, and Instagram is starting to become more of a platform, and that’s great and all.

But Facebook, long-term, should be thinking about putting itself in a position to compete with Apple, Google, Microsoft, and Amazon. It has already dabbled with forking Android. But how does Instagram (and/or its team) fit into the inevitable Facebook OS? That’s something I’m eager to see.

Also: Why Android Won’t Ruin Instagram