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Facebook is exerting its influence on Instagram
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Facebook is exerting its influence on Instagram

Published in: Ecommerce | Wednesday, 28 August 2019. | Written by: Theo Leworthy

Social media giant Facebook is exerting more pressure on Instagram, the photo-sharing social site that it purchased a few years ago. In a lot of ways, Instagram is vitally important to Facebook. Though not as large as its parent, the platform is huge by most people’s standards (it hit a billion users last year) – and, increasingly unlike Facebook, it’s an appealing place for younger internet users to hang out.

Facebook’s share price has risen by 35% year to date

FB Aug 28

Source: Yahoo Finance

Instagram’s size and increasing relevance might be one of the reasons that Facebook has been working to integrate the backend of its whole family of apps: the eponymous platform itself, along with Messenger, WhatsApp, and Instagram. It’s also why the company has been incrementally increasing the number of ads on the last of those platforms, pumping up its monetisation factor. But now, Facebook founder and CEO, Mark Zuckerberg, has announced plans to bring these products closer together than ever.

Earlier this month, we learnt that Instagram would become ‘Instagram from Facebook’ and WhatsApp would become ‘WhatsApp from Facebook’. Why the rebrand? Some commentators believe Zuckerberg is looking to revitalise Facebook’s profile (which has been hit hard by scandals over fake news and Cambridge Analytica) via proximity to its popular acquisitions. But there’s another possibility: that Facebook is making a strategic move to avoid anti-trust authorities. Gemma Butler, marketing director at the Chartered Institute for Marketing, said: “This feels like Facebook is preparing to be clamped down on. The more integrated the three products are, the harder they will be to split up.”

Zuckerberg, however, has his own explanation: public interest. In a comment made via Facebook’s company blog, he wrote: “We want to give people a choice so they can reach their friends across these networks from whichever app they prefer,” noting that the decision was taken in order to “to be clearer about the products and services that are part of Facebook”.

Disclosure

Dominion holds Facebook in its Global Trends Ecommerce Fund.


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The views expressed in this article are those of the author at the date of publication and not necessarily those of Dominion Fund Management Limited. The content of this article is not intended as investment advice and will not be updated after publication. Images, video, quotations from literature and any such material which may be subject to copyright is reproduced in whole or in part in this article on the basis of Fair use as applied to news reporting and journalistic comment on events.

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