Is It Time To Spin-Off Instagram?

Every few years, the stars align and a new social network becomes a hit. And almost every time this happens, Facebook offers the newcomer a stick or carrot choice.

The carrot in this case would be an overpriced acquisition. As for the stick, Facebook can copy the core feature of its competitor rendering it almost obsolete.

Good Camera+Filters= The secret sauce

In 2010, both Kevin Systrom and Mike Krieger were ready to start something new. Systrom was experimenting with a check-in app called Burbn. The pair noticed that Burbn users were using the app to share photos instead of only sharing their locations.

Photos taken by phones at that time were terrible. At the time, people were using filter apps before sharing their photos. Systrom realized that to give Instagram a competitive edge, it had to have filters integrated into the app.

In June 2010, Apple released the iPhone 4 and it was the first phone to have a decent camera. On October 6th, 2010, Instagram was officially launched, and within three months, it hit 1 million users!

By 2012, the app had reached 30 million users.

‘Instagram Can Hurt Us’- Mark Zuckerberg

The situation was getting too close for comfort for Mark Zuckerberg. Instagram was no longer a small project, it had proven to be a serious competitor.

Facebook made an offer to acquire Instagram for $ 1 billion, promising to keep it independent.

Money might not have been the primary reason behind the Instagram cofounders’ decision to accept the offer. In a chat between Systrom and VC Matt Cohler, Systrom wrote:

“Will [Zuckerberg] go into destroy mode if I say no?”.

Cohler replied “Probably,”.

Systrom argued that maybe they should convince Zuckerberg that Instagram didn’t pose a threat to Facebook and decline the offer. Cohler warned him:

"Bottom line I don't think we'll ever escape the wrath of mark"

In the end, the acquisition went through even though.

While Facebook tried for so long to fend off accusations that it bought Instagram to avoid competition, emails exchanged between Mark Zuckerberg and Facebook CFO at the time, David Ebersman, may show otherwise.

Mark wrote about competing platforms:

“These businesses are nascent but the networks established, the brands are already meaningful, and if they grow to a large scale the could be very disruptive to us”

Broken Promises

Facebook maintained Instagram’s autonomy until 2018. The Instagram team had the freedom to build the product while benefitting from the resources available at Facebook’s disposal, most importantly, promotion on the massive platform. But it was time to pay the bill.

Zuckerberg ordered Instagram promotions on Facebook be cut down.

The team at Instagram was balked when Facebook dropped the Instagram logo on photos shared to Facebook from Instagram. The photos appeared as if they were uploaded to Facebook.

Facebook also started testing notifications inside Instagram to drive users to its own platform.

Systrom and Krieger took their independence seriously. Facebook’s interference was a clear sign it was time to say goodbye. On September 24th, 2018, both founders left the company.

When you leave anything, there are obviously reasons for leaving. No one ever leaves a job because everything’s awesome, right? — Kevin Systrom

The Storm

Last September, The Wall Street Journal published The Facebook Files, an investigation on Facebook’s practices based on internal documents leaked by a whistleblower.

According to the investigation:

  • Instagram makes body image issues worse for one in three teen girls.

  • Teens blame Instagram for increases in the rate of anxiety and depression.

The leak left the company speechless. While the company was still scrambling to prepare a suitable response, it was hit with an even bigger disaster.

On October 4th, all Facebook platforms went down. The event affected not only Facebook, Instagram, and Whatsapp but also the billions of people that rely on the services to communicate and do business.

Facebook first claimed that the 6 -hour outage was caused by a military raid but later issued an explanation saying that it was due to a human error. An engineer was doing routine maintenance work and accidentally issued a command that "unintentionally took down all the connections in our backbone network, effectively disconnecting Facebook data centers globally."

The actions of one person at one company took down three platforms affecting billions of people as a result.

Both the leaks and the outage lead us to the question, is it time to break up Facebook? Would Instagram be better off as an independent company?

If you haven’t yet…