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In some ways I wonder if Facebook is viewing these acquisitions more as money spent in a defensive "moat" a la Google.

I think that's exactly what they're doing -- except in this case I think Instagram was more of a direct threat to Facebook's core business than, say, YouTube was to Google's.

Google was like a big castle with a moat protecting it. YouTube was just a moat -- no economic castle yet. Google bought them to add to their moat and further protect the castle.

No way Instagram is worth $1bb as a standalone, going-concern -- but as a defensive play for FB it might be.

All back to Clayton Christensen: modular systems disrupt integrated systems. Microsoft, Intel disrupt Apple, IBM. Instagram, Twitter, Pinterest disrupt Facebook.

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