Instagram vs Snapchat: are we at the beginning of an app war?

Back in June 2006, Facebook founder, Mark Zuckerberg, declined an offer from Yahoo—one of the Internet’s biggest businesses at the time—to purchase Facebook for $1 billion. (Cue Dr. Evil meme).

While that amount may not seem overly significant by today’s standards, particularly given Facebook is now worth over 300 times that amount, it’s important to put this offer into context.

In 2006, Facebook was only open to US college students, and consequently only had about 12 million active users (compared to the 1.79 billion it has now). The News Feed feature didn’t exist, so the site was more akin to Myspace, and even though it was generating about $30 million in revenue, they hadn’t yet worked out how to turn that income into profit.

Fast forward to 2016 and the decision not to sell was obviously a wise one, and Facebook has gone from being the hunted to the hunter. Significant purchases by Facebook include WhatsApp for $19 billion in 2014, Oculus VR for $2 billion in 2014, and Instagram for $1 billion in 2012.

But, in a very appropriate case of history repeating itself, there’s been one business on Zuckerberg’s wish list that’s resisted the allure of a large amount of cash.

In 2013, Snapchat refused a $3 billion offer from Zuckerberg. It came after Facebook initially tried to copy Snapchat with its own failed platform, Poke. Never heard of it? Well, you’re not the only one. Poke never reached more than a 2% share of the market, and Snapchat’s active users grew after Poke launched.

So, what was Facebook to do? Their attempts to copy  and then acquire Snapchat had both failed, and Snapchat has continued to grow: recent reports show the app now has over 150 million active daily users.

Enter Instagram Stories: Facebook’s second attempt at, well … blatantly copying Snapchat. Just like Snapchat, the pictures and videos you share on Instagram Stories are not permanently attached to your profile, and you can do stuff like add stickers and draw on your pics in different colours.

There are still some differences, such as Snapchat’s lenses feature not occurring in Stories. But guess what? In March 2016, Facebook purchased the filter app company Masqrd, so it’s probably fair to say it’s only a matter of time before this feature is added to Stories.

But what does a move like this mean for Facebook/Instagram and Snapchat? Can Facebook seriously copy an app and expect people to take it seriously?

Well, it seems they can. For example, Nike’s most popular Snapchat story had 66,000 views, but they received a massive 800,000 views on Instagram Stories in just 24 hours. For a business, this stat alone is enough to determine what platform they’re going to filter the bulk of their advertising budget into.

The number of users Facebook has is always going to be attractive to advertisers, and every dollar businesses spend on advertising through Instagram Stories is a dollar that would’ve otherwise gone into Snapchat. And herein lays the reason Facebook made this move.

Stories isn’t about simply copying something Snapchat does well—although that’s certainly part of the strategy. It’s about taking revenue away from Snapchat. It’s about slowing the amount of Facebook users who are using Instagram and Snapchat. Most of all, it’s about trying to destroy Snapchat.

If anyone has researched the browser wars of the late-nineties, you’ll understand how, even on the Internet, it’s almost impossible for an independent player to beat a large, well-established organisation. Facebook may no longer be the coolest kid on the block, but they do have the dominant position, and Instagram Stories is about using that position to try and strangle the smaller player.

 

 

 

Stuart Prendergast