April 9, 2012 — Facebook Announced the Acquisition of Instagram

The purchase by Facebook of the rapidly growing platform Instagram is not just another deal. It legitimized and launched several important processes in the industry.

How did it happen?

According to the witnesses, the negotiations went directly between Facebook CEO Mark Zuckerberg and Instagram CEO Kevin Systrom.

The negotiations lasted literally several days. On April 9, 2012, Mark Zuckerberg announced the deal on his Facebook page, which was also something new for the industry.

How did this affect the industry?

Legitimization of billion-dollar startup acquisitions

Instagram was not the first IT company that was bought for $1 billion or more, but it was the first IT company that did not have revenue corresponding to that valuation. Negotiations to acquire Instagram began even before the Android application was released.

From that moment on, the startup market began to massively evaluate not current profit and revenue, but audience and growth.

Strategic acquisitions

It was obvious that Facebook bought a potential competitor, since both companies compete for the time of users scrolling through the feed.

The acquisition of Instagram began another wave of acquisitions of potential competitors.

The trend toward platform empires

Large platforms at that time began to gather several social networks and products around themselves. Such a large deal made this trend more obvious.

The attention economy

Instagram and Facebook compete for users’ attention. Such a large deal showed the market that user attention was becoming one of the key metrics in the IT business.

Instagram = $1 billion

This deal gave rise to a meme that, in a way, is still alive today. On the internet, the amount of money began to be measured in Instagrams, where 1 Instagram = $1 billion.