Pop into any discussion on the Facebook-Instagram deal and a single argument continues to bear its (ugly and dumb) head: that Facebook buying Instagram is equivalent to Google buying YouTube in 2006 for $1.65Bn.
The Facebook-Instagram deal isn’t the same as the Google-YouTube deal for four reasons:
- Instagram isn’t the only player in the mobile photo sharing space, unlike YouTube’s absolute domination when it was purchased by Google in 2006. Path, Facebook, etc. are quite, if not equally, popular as well.
- Instagram has a mere 30M users. It doesn’t even have a strong footprint in the Android marketplace, or heck, even a Windows Mobile app. Do people really believe that that the entire photo-sharing market is limited to iPhone users?
- YouTube was at the frontier of an entirely new medium: video on the web. Pictures, though, have been shared on the internet for two decades now.
- Perhaps most importantly, buying YouTube gave Google access to a huge content library that it could (and did) monetize. Instagram’s content library is quite worthless in this regard. You can’t show ads in pictures the same way you can with video; the revenue opportunities remain quite muted.