Companies Go All Out To Grab Online Market Share; But Who Gains What?

With Facebook’s acquisition of Instagram at US$ 1 Billion, it is time to analyze the implications & repercussions of the frenetic activity the tech companies have undertaken.

With the sky-high price Facebook has displayed an appetite that may look ravenous, but a little investigation will reveal the race to own the maximum interacting users online. Google was one of the chief competitors, though Facebook still thinks Orkut is a contender. Facebook knew, that had it not offered such a lucrative offer, Instagram & its 30 Million strong subscriber-base would had headed to Google eventually, reveals Gartner’s principal research analyst (India) Asheesh Raina, “Facebook paid a premium, as it wanted to keep Instagram out of the hands of the competitors

What’s the Fuss about Instagram?

Instagram is a mobile photo enhancer. In other words, it allows user to take pictures & apply digital filters & effects to them. Once a user has done his magic, the photos can then be easily shared on Social Networking sites.

Facebook had been struggling with user activity. Though it had a huge subscriber based, the Monthly Active User List was comparatively shorter. Instagram’s user base was not just growing but thriving. Additionally, pulling-in Instagram put Facebook in a much better & stronger position than say Apple, Google, Amazon, (and potentially Microsoft) ecosystems. All these would have been a potential threat to Facebook eventually. Let’s just say Facebook wanted to protect its turf.

One can correlate this step to the acquisition of Motorola Mobility by Google for US$ 12 Billion even though the company’s last balance sheet was in Red. Similarly, Microsoft had shelled out 8.5 Billion to acquire Skype. While Google acquired Motorola to protect its Android Ecosystem from patent wars, Skype offered a treasure trove of subscriber-base.

While companies shell out huge sums of money, users get to enjoy the plethora of newly added premium services. Let’s just hope advertising does not play a spoil-sport.

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