Facebook Doesn’t Own Instagram; They’re Competitors

When Facebook (NASDAQ: FB  ) bought Instagram for nearly a cool billion dollars, the social-media world seemed to "like" the decision. However, nearly two years after the deal, Facebook still hasn't monetized this venture.

Even worse, it is increasingly looking like Instagram is becoming a competitor. A recent EU study on social media confirms this trend: UK teens aged 16-18 are embarrassed to be associated with Facebook and are moving to "more hip" social media sites -- including, you guessed it, Instagram.

This puts Facebook in a tough situation. Right now, they derive no direct benefit from Instagram's existence and are actually harmed by cannibalization as it grows. These are the hallmarks of a competitor, not a business unit.

Of course, this could change with the effective monetization of Instagram users. Compared to Facebook's monetization of over $4 per account, that number is currently $0 from Instagram. However, this is easier said than done, Instagram users have already pushed back against a change of terms in the past and seem to be more resistant to change than Facebook users.

In today's video, Jamal Carnette talks Facebook and Instagram.

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