Mark Zuckerberg says he doesn't "plan on doing many more" big acquisitions. But don't hold him to that.
As fast as Facebook is trying to innovate in the social-media world, it is being outpaced in crucial areas. Photo-sharing may be a key feature of Facebook, yet for mobile devices, it is Instagram that has captured the momentum. Instagram has more than 30 million users, generated mostly via the Apple App Store.
The $1 billion price tag of Facebook's deal for Instagram looks hefty, especially considering Instagram has no revenue. Yet it is small relative to the $100 billion valuation Facebook hopes to secure via its initial public offering.
Is Pinterest the next target for Facebook or one of its rivals? The online pinboard helps users organize and share photos, products or anything else that they like. And it has grown to become the third-largest social network in the U.S., according to Experian Hitwise. Pinterest, which has been around just since 2009, pulled in 104 million total visits in March in the U.S. That outpaced the 86 million visits enjoyed by LinkedIn, a company valued at almost $13 billion.
While Facebook was far ahead with seven billion visits, Pinterest is building momentum and capturing the kind of data—users indicating products that they like—that Facebook says is one of its biggest strengths.
Plugging product holes is a worthy use of cash, so long as Facebook doesn't have too many to fill.
Write to Rolfe Winkler at rolfe.winkler@wsj.com
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