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I agree with your second point but not with your first.

To the consumer, Instagram remains nearly completely decoupled from facebook except for friend recommendations and SSO. Instagram has a fundamentally different photo "culture" and most people don't spend time on instagram OR facebook, they simply use both for different things. On facebook I'll see 900 pictures of my cousin's new baby or graduation photos, on instagram I'll see travel/lifestyle/modeling shots. Instagram gave facebook a kick in the ass to get on the mobile train before it was too late, but I don't think it was ever a threat to facebook's core social graph model.

Back to your second point, I agree, Instagram is an enormously valuable business line for facebook. But i think its also true that facebook's infrastructure and Ad platform lead to a 2 + 2 = 5 situation for the companies. An independent instagram would likely be doing well, but not be as valuable as they are within Facebook. Sure, facebook would be worth $100B less without the ads it serves on instagram, but there's no law or moral imperative against one company having multiple, highly lucrative business lines that share certain overhead.

I see the instagram acquisition as more akin to Tata group acquiring Jaguar. Jaguar had a good brand and an interested demographic, but were a terribly run business leading to poor sales and quality issued. Tata buying them gave new life to the brand and they're now successful and standing on their own again. Instagram was always going to be some level of successful, but with facebook they're a juggernaut.

I think a lot of people have the idea that facebook acquired instagram as a defensive play to remove a direct competitor, but I don't think that they are direct competitors. Facebook and MySpace were competitors, both shooting for the generalized social graph, and Facebook won that fight, from then on being a natural monopoly in that space.




In the end they all compete for attention which is the only valuable limited resource everybody has.

From my (naive) observation it seems that facebook "the page" popularity has dwindled and people migrated towards messaging (be it the Messenger or WhatsApp) and instagram.




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