Internet giants scramble for social media pie
In India, mobile advertising set to touch $144 crore by 2013. In March 2012, the market was pegged at $105 crore , according to the findings of the Internet and Mobile Association of India
Last week, when news about Facebook acquiring the startup photo-sharing app Instagram for a whopping $1 billion surfaced, the digital world was abuzz with frantic activity and comments. While the investors and market watchers got busy analysing the valuation of Instagram in the wake of the deal, others talked about how Facebook’s appetite to gobble up players had increased over the years.
Scratch the surface a little a bit and one can see that Facebook was not just trying to net the 30-million strong user base of Instagram, but was rather making a strategic move to keep competitors (read Google) at bay. As Gartner’s principal research analyst (India) Asheesh Raina puts it, “Facebook paid a premium, as it wanted to keep Instagram out of the hands of the competitors.”
Though an eye-popping $1 billion may sound too much a price for protecting its turf from a potential threat, it is nowhere close to what Google paid ($12 billion) last year to Motorola Mobility to protect its mobile franchise. Or, when Microsoft shelled out $8.5 billion to acquire Skype. Google acquired Motorola Mobility to protect its popular Android mobile operating system from Apple and Microsoft’s anti-competitive threats to its patent portfolio.
Analysts however believe there’s another compelling reason why Facebook spent big on the acquisition. As research firm Forrester’s CEO George Colony wrote, Facebook is too web-centric:” App internet poses mortal danger for any player that remains too web-centric. It will enable companies to directly link with their customers.”
The acquisition of Instagram puts Facebook in a better position in the app internet market and perhaps becomes a template for how Facebook will expand its model into the new high engagement architecture, Colony added. Without Facebook’s own app presence, “Apple, Google, Amazon, (and potentially Microsoft) ecosystems can become too powerful, blocking the Facebook’s growth and presence,” he wrote.
Instagram, a free photo sharing programme, was launched in October 2010 by Kevin Systrom. It allows users to take photos and apply digital filters and effects, before sharing them on social networking sites.
An article in Fortune magazine in November suggested how the mobile is going to be the next battlefront for Silicon Valley’s web giants. Facebook, Google, and Apple are all competing to attract mobile users and make money off their actions. “Google may also find ways to build many Google+ features right into Android phones and tablets, making it harder for rivals to compete. That last point is not lost on (Mark) Zuckerberg. It prompted him to seek closer ties with Google’s biggest rival in mobile ¬¬¬¬¬--- Apple,” the Fortune article said.
In India, mobile advertising is all set to touch $144 crore by 2013. In March, the market was pegged at $105 crore, according to the findings of Internet and Mobile Association of India (IAMAI). Raina feels Facebook is aware that its strength lies in easy interface, photo-tagging and sharing capabilities. Instagram strengthens its presence in the space. “More, it gives them access to mobile devices and helps users instantly edit, upload and share photos through their devices,” he says.
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