Geeks2U Promise
We guarantee you'll love our fast, friendly service - or we'll refund your money.  
133,572 Happy Customers & Counting
Need tech support?
1300 769 448
Extended hours, 7 days a week
Home  /  geekspeak  /  Do big web buyouts indicate we're on the verge of another dotcom bust?

Do big web buyouts indicate we're on the verge of another dotcom bust?

Tags : 

Facebook, the social network that’s risen above its contemporaries as the success story of the recent social internet age, recently announced that it was purchasing social photography sharing service Instagram. Nothing terribly surprising there; these kinds of business transactions take place all the time.

What made headlines was the purchase price, with Facebook agreeing to purchase Instagram for the rather healthy (if you’re the owner of Instagram) price of one billion dollars. Instagram’s got an estimated 30 million users; that means that Facebook presumably values each user at around 33 bucks a piece. That’s quite high for a service that the users could always opt to stop using straight away. With the news of Facebook’s acquisition of Instagram, many threatened to do just that.

One billion dollars for a company that allows people to share photos from mobile devices seems like a lot of money, and it did raise the question in many circles as to whether Facebook had overpaid for Instagram, as well as raising the spectre of the 1999 dotcom “bust”. Back in ’99, many companies that labeled themselves as “Internet” companies — whether they were selling paperclips or petfood — were massive overvalued, leading to an inevitable bust when the real bottom line of those markets was realised.

Was one billion dollars — a mix of cash and Facebook shares — a lot to pay? It certainly was, but it perhaps wasn’t a matter of overpaying. Facebook wasn’t just buying Instagram in order to get access to its photo sharing users; it was also doing so in order to buy out a competitor. Again, that’s business, and possibly smart business (although only time will tell on that score).

The internet market has matured significantly since 1999, but Facebook’s buyout of Instagram is about more than just a CEO seeing some nice photos and opening up his wallet; it’s also a strategic move around mobile web applications.

One interesting business parallel popped up at the same time as Facebook was buying Instagram, as Microsoft purchased a number of patents from AOL — including most of the patents that revolved around the now-defunct Netscape Navigator browser. Back in 1999, Microsoft was being investigated by the US Department of Justice over anti-trust allegations relating to its own browser and the position of Netscape relative to them; in 2012, Microsoft (in essence) owns Netscape.


Recent News

Social media can be a huge force for change, and in these times where many of us are bouncing in and out of lockdowns, also a vital lifeline for communication on everything from important matters to the wildly trivial. We’re all allowed our personal obsessions, after all. However, many of us don’t think about the

Microsoft recently released its first public-facing beta version of the Windows 11 operating system that it will ship later this year. You’ve got to be signed up to its Windows Insider program to get it – and be willing to accept a little risk in terms of unstable operating systems – but then this is

Telstra recently announced that its 5G coverage for its mobile phone network covers around 75% of the Australian population. It’s also announced the “longest” (as in range) 5G phone call in the world, spanning some 113km in Gippsland. Meanwhile, rival telco Optus has claimed that it’s hit 300mbps upstream on trials of its emerging mmWave

Microsoft recently announced its next generation of the Windows operating system, Windows 11. If you’re thinking that seems odd given it did announce some years back that Windows 10 would be the “final” version of Windows, you’re not alone. For many years now, Microsoft’s simply provided Windows 10 updates rather than “new” versions of Windows,

Coronavirus (COVID-19) Update

Learn about the precautions we are taking and our new contactless pick-up and remote service options. Read More
Get help setting up your home office or homework area today. Learn More