In Defense of Facebook's Instagram Purchase
NEW YORK (TheStreet) -- Here's the easy part: lament that Facebook paid too much for Instagram. It isn't hard to do.
Developed for Apple's(AAPL) iPhone to doctor and share photographs and now running on Google's(GOOG) Android system, Instagram is only two-years old, has about a dozen employees, produces precisely zero revenues (which puts it in the profit category of -- don't ask) but sold for $1 billion.
The basic facts easily call to mind the most indulgent deals of the Internet bubble -- and perhaps for good reason. For historical context, just about all media outlets mentioned their favorite bad deal of that late 1990's period.
The Wall Street Journal, however, is one of the few to point out another historic possibility: the Instagram deal, they wrote, "harkens back to Google's $1.6 billion acquisition of video-sharing site YouTube in 2006. At the time, analysts questioned the hefty price tag. But the deal instantly made Google a leader in Internet video and allowed it to expand its advertising to new formats."