Facebook is acquiring Instagram for $1 billion, covering its flank on mobile photo sharing and ensuring that it'll have user growth its first few quarters as a publicly traded company.
Mark Zuckerberg, Facebook CEO, said in the announcement today:
This is an important milestone for Facebook because it's the first time we've ever acquired a product and company with so many users. We don't plan on doing many more of these, if any at all. But providing the best photo sharing experience is one reason why so many people love Facebook and we knew it would be worth bringing these two companies together.
He should have just said that Facebook's acquisition of Instagram is another milestone: the maturity of social media and apps. Going forward, Facebook will have nearly unlimited capital. If there's a threat -- and Instagram was in photo sharing -- Facebook will simply buy it. Google will surely bid on a few Facebook targets if only to raise Zuckerberg's price tag.
Sound familiar? That's because Facebook's strategy is well-worn in the technology industry. Oracle buys everything in enterprise software. Google has filled in gaps and is expanding into hardware with Motorola Mobility. Microsoft will make its acquisitions, and has covered its unified communications tail by buying Skype. Dell is acquiring its way to focus on intellectual property and higher-end services. Pick a tech company with cash and you'll find acquisitions close behind.
Facebook isn't straying far from the tech playbook with its Instagram purchase. Zuckerberg may have invented the social-media revolution, but as Facebook becomes a mammoth corporation it will look like every other acquisition-hungry company. If you play this Instagram deal out it's quite possible that Zuckerberg could be the Larry Ellison of the social ecosystem. Why let a startup sneak up on you when you can just buy it?