I told you so.
Earlier this week I talked about Facebook’s purchase of Instagram. I suggested that they spent $1 billion for a company they didn’t need. I said the only reason Facebook spent the money on Instagram was so Marc Andreesen, one of the early investors in Instagram, could make a huge return on his bet. Facebook doesn’t need a photo sharing application, they already have one. But because Marc Andreesen is also one of the early investors in Facebook, and sits on the Facebook board of directors, they bought Instagram anyway.
Marc Andreesen was an early investor in Facebook and Instagram as well as one of the original Coneheads.
Andreesen in March of 2010 invested $250,000 in Instagram. After Instagram was sold for a billion this year Andreesen reaped a return that was 280 times his initial investment. That’s almost 70 million dollars. I guess it’s merely a coincidence that Andreesen sits on the very same Facebook committee which agreed to cough up the one billion. (He claims to have recused himself.) By the way, the creator of Instagram is Kevin Systrom who comes from Google. All part of the same family of venture capital.
Today Facebook launched their new photo sharing app. And apparently their app is as good as the one they bought from Instagram.
Now it turns out somebody else is suggesting Facebook didn’t need Instagram.
From Mashable:
Interestingly, none of the app’s 15 filters were developed by the Instagram team, Facebook product manager Dirk Stoop told The New York Times. The app, the Times suggests, has been in development for much longer
In other words. Facebook already had a photo sharing app that worked great. They spent one billion on Instagram to destroy their competition and feather the nest of their investors. Buying your competition is not the free market. It puts people out of work while making the already rich, i.e. Marc Andreesen, richer. Whatever happened to competition? Where was the justice department in all this? Facebook didn’t need a photo app. Now people are out of work, and the consumer has fewer choices.
Originally Broadcast May 24, 2012. Colin Powell should shut up. Paul Dooley, Jimmy Dore and Frank Conniff. Please subscribe to our show on iTunes, and follow us on the oh so evil Facebook.
