Before the iPhone sparked the mobile generation, Facebook was the top social site for users to upload their photos (among other things). And thanks to how Facebook has set itself up, one of its biggest advantages is the silo effect. All your photos, all your friends, all your content. All your base are belong to them, and it's all in one giant silo. But Facebook failed to adapt quickly to the smart phone (and arguably still hasn't gotten it all worked out) and Instagram has been putting a dent in Facebook's silo ever since it launched.
It turns out that curating photos in a web browser—or desperately pawing at a clunky app—isn't what users want to do in their free time. Users want what amounts to a digital Polaroid: open, snap, and share. Instagram nailed it and they've been eating Facebook's lunch on the photo-sharing front ever since.
Facebook's voracious appetite
Facebook's entire business model is built around the concept of gobbling up every bit of information they can get about their users. Every post, every comment, and every photo uploaded is added to a profile to build what amounts to the digital fingerprint* of a user. Senator Al Franken touched on this in his letter to the National Telecommunications and Information Administration:
Through the Tag Suggestions feature, Facebook leveraged its enormous database of tagged photographs and the ongoing tagging activities of Facebook users to create a massive database of its users’ “faceprints”-unique digital files comparable to fingerprints that can be used to identify an individual based on his or her photograph. Because of the size of Facebook’s photo collection and the speed with which its users are continuously tagging and identifying individuals in those photos, Facebook likely holds the largest and most accurate privately-held collection of faceprints in the world. In fact, given that Facebook has 845 million users-and that the company opted all of its users into the program-a back of the envelope calculation suggests that Facebook could easily have a faceprint for one out of every twenty people on the planet.
With the acquisition of Instagram, Facebook will also be getting a huge influx of location data such as where users are going, who they're with, and what they're doing via tagged and geotagged Instagram photos.
Where will all this information go? Most likely it will end up adding more detailed information to a users' Facebook Timeline, result in more "relevant" advertising and content, and an ever more accurate digital fingerprint of who you are. But hey, no worries... Facebook has a great track record for privacy. Right?
Instagram will stay the same… sorta
Mark Zuckerberg claims Instagram will remain independent. The service supposedly will stay the same and users won't have to upload their photos to Facebook if they don't want. But I'll bet Facebook takes a very prominent position in Instagram's interface, and will be turned on by default. I'm also betting those photos will still end up hosted on Facebook's servers and they'll be added into each users' digital fingerprint.
Sure, how you use Instagram may not change much, but what's done with the pictures you send them probably will.
* Facebook users can turn off the Tag Suggestions feature, but I doubt most know what it's doing in the background, nor how to deactivate it if they wanted to. Facebook has a help article on how to do this, but they not-so-subtly suggest that in doing so, you'll ruin Facebook for everyone.
Updated December 18, 2012:
Well, it was only a matter of time. The first shady action of Instagram is here. Instagram has claimed the right to sell user's photos without their notice, consent, or ability to opt out. It's unsurprising to say the least, but it's still disappointing.