With Facebook’s announcement that it will acquire Instagram, it’s worth returning to an article in Fast Company not quite six months old that talked about “The Great Tech War of 2012″ between Apple, Google, Amazon and Facebook. Of course, most of us use the services of all four of these technology “giants” – what Eric Schmidt, Google’s executive chairman and former CEO referred to as the “Gang of Four”. Microsoft might be included as number five, but despite the ubiquity of the Windows OS, its forays into online purchases and social media have been less than stellar.
It’s worth quoting Farhad Manjoo’s article at length, if only to make apparent how rapidly the technology environment is changing, even over the past six months. From Fast Company:
There was a time, not long ago, when you could sum up each company quite neatly: Apple made consumer electronics, Google ran a search engine, Amazon was a web store, and Facebook was a social network. How quaint that assessment seems today.
Jeff Bezos, who was ahead of the curve in creating a cloud data service, is pushing Amazon into digital media, book publishing, and, with his highly buzzed-about new line of Kindle tablets, including the $199 Fire, a direct assault on the iPad. Amazon almost doubled in size from 2008 to 2010, when it hit $34 billion in annual revenue; analysts expect it to reach $100 billion in annual revenue by 2015, faster than any company ever.
Remember when Google’s goal was to catalog all the world’s information? Guess that task was too tiny. In just a few months at the helm, CEO Larry Page has launched a social network (Google+) to challenge Facebook, and acquired Motorola Mobility for $12.5 billion, in part to compete more ferociously against Apple. Google’s YouTube video service is courting producers to make original programming. Page can afford these big swings (and others) in the years ahead, given the way his advertising business just keeps growing. It’s on pace to bring in more than $30 billion this year, almost double 2007′s revenue.
Facebook, meanwhile, is now more than just the world’s biggest social network; it is the world’s most expansive enabler of human communication. It has changed the ways in which we interact (witness its new Timeline interface); it has redefined the way we share–personal info, pictures (more than 250 million a day), and now news, music, TV, and movies. With access to the “Likes” of more than 800 million people, CEO Mark Zuckerberg has an unequaled trove of data on individual consumer behavior that he can use to personalize both media and advertising.
Amazon, Apple, Facebook, and Google don’t recognize any borders; they feel no qualms about marching beyond the walls of tech into retailing, advertising, publishing, movies, TV, communications, and even finance. Across the economy, these four companies are increasingly setting the agenda. Bezos, Jobs, Zuckerberg, and Page look at the business world and justifiably imagine all of it funneling through their servers. Why not go for everything? And in their competition, each combatant is getting stronger, separating the quartet further from the rest of the pack.
There are no borders – in light of that, Facebook’s acquisition of Instagram is minor, something almost to be expected. Especially when you consider that Facebook was born in the browser era and Instagram an entirely mobile platform (until last week with the release of an Android App, you could only use it on an iPhone). When you’re out on the street, it’s much easier to update your online presence with a photo rather than text. Zuckerberg said that Facebook intends to keep Instagram a separate development, allowing it to work with rival platforms. But what no doubt worried Facebook was that Instagram had already reached 30 million users (who upload five million photos a day) in less than two years and just closed on a round of funding to provide it with $50 million in financing through several investors, including Sequoia Capital, an early backer of Google.
And Instagram? It is indeed the stuff of digital dreams, of the essence of technology. For most of their early days (which have not been all that many), the four employees (including the two founders) sat in the cramped old offices of Twitter in the South Park section of San Francisco, four tables pushed together in the center of the room. Last year, they added more staff (now at 12) and moved across the street. The two founders created an early version of the platform while graduate students at Stanford, but it took off with a rewrite and an App for the iPhone. As Melissa Parrish at Forrester Research noted:
It’s the Web fairy tale that all start-ups dream of. They took a simple behavior — sharing pictures with friends — and made it a utility that people want.
Turning a simple human behavior into an easy to use platform – this is the essence of the digital revolution. There will be more Instagrams, and many more acquisitions from the Gang of Four.