Facebook’s Zuckerberg Defends Instagram PurchaseBy: Mike Fossum - May 8, 2012
It’s common industry knowledge that Facebook acquired photo sharing application Instagram for a quick $1 billion recently, and with the social network’s projected $5 billion IPO pending, founder and CEO Mark Zuckerberg explained his reasoning behind the purchase at a New York investor meeting yesterday.
Some have wondered why Zuckerberg, who apparently left the Facebook board a bit in the dark on the matter, would quickly opt to buy a fledging company that didn’t generate revenue for such an exorbitant amount of cash. This sort of rash behavior makes investors nervous, and Zuckerberg shed some light on the deal to calm any reservations on whether or not Facebook’s governance is stable. Interestingly, Twitter was mentioned as likewise being interested in Instagram around the time it was acquired, and Zuckerberg states that as soon as the user metrics of the app hit a “tipping point” indicative of future growth, Facebook moved in quickly.
Zuckerberg, in a hoodie and jeans, also mentioned potential growth in China, the world’s largest interent market. Presently, the social network is blocked by that country’s Great Firewall, and Chinese social networkers use a Facebook knock-off called renren. There is likely no way that Facebook will ignore China, which is presently more connected than the U.S. in regards to social networks, so it will be interesting to see how this eventually plays out. Zuckerberg went on to say that Facebook execs will be willing to speaking with Chinese officials for a possible negotiation, which would significantly boost his company’s reach.