Why the Facebook Merger with Instagram Turned Into a Great Move

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Ever since technology paved way for portable devices, mobile traffic has been very important for Facebook and has allowed the social platform to grow significantly. The people at Facebook have been aware of this for a very long time and are very devoted to utilizing mobile technology to the fullest. So what did they do to help further this goal?

In 2012, Facebook acquired Instagram in a deal that was worth $1 billion. Till now, this is the largest acquisition ever. Instagram, which is very popular among its users, is a photo sharing service for mobile devices, which provides increased levels of engagement to the users. When the deal was made, Facebook had to bear a lot of criticism. Most of the industry speculated that the deal was not worth the amount of money involved, especially when you factored in the fact that Instagram had no proper revenues or business models in 2012.

As of late, the industry is beginning to admit how wrong they were at that time, and that Facebook indeed, made a smart move. Recently, Instagram has launched a new service by the name of Instagram Direct, which allows Android and iOS users to send texts, photos and videos, privately. With this development, Instagram is now on its way of becoming the largest photo sharing service across the globe.

Before Facebook bought Instagram, it usually did not spend significant amounts on acquisitions, which had only one main purpose: to allow the talent pool at the company grow. In 2013, Facebook modified this goal and began to acquire those companies that would help Facebook grow. Examples of this include services that offer mobile apps, cloud technology and management of marketing campaigns.

Towards the end of last year, Facebook also showed an interest in Snapchat, but the company turned down their offer of $3 billion. However, now that Instagram Direct is in the market, Facebook is at par with Snapchat. By no means would it be a surprise, if Facebook takes the lead in the near future.

Instagram is the only service that can still work independently, retaining its own application and user base. This remains so even after the acquisition. However, all other companies that Facebook bought, were shut down, once the deal was made. Instead, Facebook used the technologies of the acquired companies to develop their own products under their own brand name.

Source: www.finance.yahoo.com 

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