When Facebook CEO Mark Zuckerberg cut a billion-dollar check and bought the photo sharing app Instagram in 2012, most people thought he had lost the marble.
“Billion dollars?” John Stewart joked with “The Daily Show” host John Stewart. “For something that would ruin your photos?”
Stewart called the decision “really unfree.” His audience, and much of the world, agreed that Zuckerberg overpayed for an app that highlighted a lot of photo filters.
Two years later, Zuckerberg opened his wallet again when Facebook agreed to buy WhatsApp for $19 billion. Many Americans were popular internationally, but had never heard of a messaging app that is less well known in the US.
No one knew what would happen with these transactions. However, the hindsight seems to be 20/20.
The government on Monday in a landmark antitrust trial that both acquisitions are now considered the greatest in Silicon Valley history – is the action of a lawn-protected monopoly. Zuckerberg, who was called the first witness at the trial, has previously denied that Instagram and WhatsApp will hurt the competition.
However, this incident could lead to the division of one of the most powerful companies in technology, dealing primarily with hypotheses. Neither the government nor Zuckerberg could predict how technology would advance from Instagram's $1 billion checks or what would happen if regulators didn't approve the purchase. This makes antitrust litigation against a company renamed Meta one of the most slippery things in the tech industry, which has long been defined by unpredictability.
“It was a very different time in Silicon Valley,” said Margaret O'Mara, a technical historian at the University of Washington, about the Facebook acquisition. “There was a vibe like, 'Oh, wow, Facebook is a bunch of kids who really spend their luxury!” ”
In particular, on Instagram, at the time, I had a front row seat to create a Facebook contract. As a reporter for Wired Magazine, I had an office next to my Instagram headquarters in San Francisco. We frequently visited the Kimchi Burrito location (a green slice of city) across the street near South Park Commons and ate it on a bench outside our Instagram office.
Kevin Systrom, co-founder of Instagram's 6-foot-5, was 28 years old. He often circled around the swings of wood and irons at South Park Commons, calling employees and talking about product ideas. Twitter co-founder Jack Dorsey, who identified as an arts child rather than a technician, played in the same South Park playground and meditated to a friend about the idea that eventually became his social media app.
This was the time when social apps were dismissed as Play Things, to post latte art and to tell people what you have for breakfast. WhatsApp, which was growing rapidly internationally, was a text messaging app with no business model. And clones of these apps were abundant, including photo sharing colors, Flickr, VSCO, Message Kik, Skype, Viber, and more.
Even Facebook faced questions about whether it was a viable business. Two months after the Silicon Valley Company announced it was buying Instagram, it held one of the most disastrous early tech public offers since the dot-com era in the late 1990s.
By the time Systrom testified three months later to the California Corporation Bureau of Corporations, a condition that would close its Facebook deal, Facebook's shares had fallen almost half the price.
However, in Silicon Valley, fortunes rise quickly. Companies move from frivolous fantasies to juggernauts in just a few years. And what might seem like a wise business move by one moment of executives can be ridiculed immediately as a mistake in the next moment. (Half of the aforementioned apps have been sold as parts for a long time, either dead or dying. There's no more locations for my favorite Kimchi Burrito.)
At the time, Systrom made a positive spin on Instagram trading as the future looked increasingly tough for Facebook.
“I have been taught throughout my life that all open markets have opposites and shortcomings,” he attended the August 2012 Department of California hearing on the sixth floor of the downtown San Francisco division. “I still firmly believe in the long-term value of Facebook.”
He turns out to be right. Today, Instagram and WhatsApp are two of the most important parts of the meta business. Postings, videos and communications on the platform regularly drive global conversations for sports, news, politics and culture. The app has billions of users.
In some respects, antitrust testing is about competitive versions that may have had a history of technology. For example, what would happen if Zuckerberg lost his Instagram bid to Dorsey? What happens if WhatsApp is on sale to Google?
What if other competitors create a great photo sharing app that could thrive if Facebook didn't use Instagram to crush them? What happens if Facebook has ruined both deals or can't keep up with competing apps and still fall behind after purchasing Instagram and WhatsApp?
These are unknown and can only be answered by those who have a time machine. Each side claims a version of what would have happened if Meta's acquisition was not approved.
In the same “Daily Show” segment in 2012, senior young correspondent Jessica Williams said that Facebook's Instagram purchases made perfect sense.
“If you wanted a photo before Instagram that looks like it was taken in the '60s, you'd have to invent a time machine and go back to 50 years ago,” she said. “Do you know how long it will cost to build?
“Easy billion dollars.”
