In a conference in Japan, Twitter’s CEO Dick Costolo told reporters that the microblogging company won’t be following Facebook’s lead with Instagram. He explicitly ruled out Twitter following suit and buying out an Instagram type company. There is a rivalry between Twitter and Facebook in the social media space. Both dominate their particular niche. Given this level of competition, it would not be unreasonable for a person to think that Twitter would try to match Facebook’s acquisition of Instagram to try and keep pace. Costolo put an axe to such notions.
Instead, Costolo said that his plans are on Twitter improving its application programming interface (API) to assist third party developers better integrate their applications with Twitter. He said that there is a tendency to react to marketplace news with actions that are inconsistent with those companies’ strategies. He said this tendency is a mistake. Costolo went in further saying that companies that move to “copy” others’ acquisitions tend to just end up wasting money.
Costolo gave an insightful analysis of “me too” acquisitions fueled by rivals’ buyouts. For example, he pointed out that shortly after Google acquired youtube, other large Internet firms rushed to buy out Youtube type alternative sites. Similarly, when Google acquired advertising giant DoubleClick, Microsoft splurged on aQuantive. Costolo says that in both cases, Google came out ahead with its buyouts. Still, you have to wonder if Twitter is happy with the Instagram buyout. After all, Instagram and Twitter worked very well together and were a natural fit. The application kept many Twitter users deeply engaged. Despite Instagram’s public pronouncements that its relationship with Twitter won’t change, it won’t be surprising to see Facebook get some sort of preferential treatment. It would be only natural. Facebook, after all, is Instagram’s new parent company.