Published by LawTechie - April 19, 2012 - LawTechie

FacebookIn the last couple of weeks Facebook has been making some pretty hefty purchases. Facebook spent $1 billion on the acquisition of Instagram, a popular photo-sharing application last week. The Instagram company isn’t more than two years old and hasn’t turned a profit yet but has about 30 million loyal users. Moreover, this has been Facebook’s largest purchase ever and made Instagrams thirteen employees instant millionaires. Facebook’s CEO, Mark Zuckerberg stated on his timeline that Facebook will not attempt to integrate Instagram directly into its social network but have the application build via it’s own platform using the same nine developers.

“For years, we’ve focused on building the best experience for sharing photos with your friends and family,” Zuckerberg said in the post. “Now, we’ll be able to work even more closely with the Instagram team to also offer the best experiences for sharing beautiful mobile photos with people based on your interests.”

Instagram recently came out with a compatible app for the Android so the sale couldn’t come at a more opportune time – as the application will grow in use. Some people have illustrated their discontent in the purchase but perhaps with the extension of Instagram into other devices the number of users will still grow.

Secondly, Facebook acquired Tagtile a few days ago. Tagtile is a customer-loyalty application – a start-up company. It offers a customer loyalty system for merchants and consumers that generates a rewards point system through a mobile phone application. Moreover, it allows app users to redeem certain rewards without actually having to do a check-in and can perhaps be a good method for consumers to share information about a store through social networks in exchange for a deal or reward. The purchase isn’t quite as big Instagram but it is evident that Facebook is trying to improve their mobile platform.

Facebook’s acquisition strategy has always been focused on bite-size “acq-hires.” This strategy is geared to a process of buying a small company to assume its talent rather than business. So one could wonder whether the aforesaid strategy has changed? Is Facebook heading towards a more defensive buy-out strategy and whether tumblr and Pinterest could be next? According to

“A defensive acquisition of Pinterest, an online idea and image-sharing site, would eliminate a direct threat to Facebook’s media sharing and user engagement dominance…Acquiring Tumblr eliminates a threat from the online-publisher’s platform for self-expression which is more comprehensive than a typical Facebook post. “

LawTechie is a blog focusing on trends in tech and digital media. Areas covered include intellectual property, cyberlaw, venture capital, transactions and litigation as they relate to the emerging sectors. The blog is edited by the firm's partner Tim Bukher with contributions from the firm's experts in their respective areas of law.


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