Facebook Inc: Instagram Stories Rips off Snapchat – What It Means for FB Stock

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Facebook Inc (NASDAQ:FB) is a force, with FB stock up 18% year-to-date to triple the S&P 500 Index and profits that continue to impress.

Facebook Inc: Instagram Stories Rips off Snapchat – What It Means for FB Stock
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It’s easy to think that the success of Facebook, then, is simply because of one man — CEO Mark Zuckerberg.

After all, FB has created two new classes of shares in recent years in order to allow the 32-year-old Harvard dropout to retain power of the company he created … well, perhaps forever.

And it goes without saying that Silicon Valley is full of strong personalities and visionaries — from the late Steve Jobs to Amazon.com, Inc. (NASDAQ:AMZN) chief exec Jeff Bezos to any number of up-and-comers who hope to make their mark.

But amazingly, Facebook just revealed it isn’t the product of one man, or even just a few “disruptors” with vision. In fact, Instagram CEO Kevin Systrom just admitted in an interview that the company pretty much copied top competitor Snapchat.

For all investors in tech companies — not just FB stock holders — this is a staggering revelation.

Good Tech Companies Imitate, FB Stock Steals

To be clear, Facebook’s core platform is not the issue — contrary to what Cameron and Tyler Winklevoss claimed a few years back. Rather, it’s FB property Instagram and its recent “Instagram Stories” platform.

Put simply, Instagram Stories is a ripoff of social media rival and secure messaging giant Snapchat and its Snapchat Stories. And Instagram CEO Kevin Systrom knows it. Here’s what he told TechCrunch:

“(E)veryone in our interview room knew there was no avoiding the Snapchat question, so I just put it bluntly. “Let’s talk about the big thing. Snapchat pioneered a lot of this format. Whole parts of the concept, the implementation, down to the details…”

‘Totally,’ Systrom interrupted me. ‘They deserve all the credit.’

I was flabbergasted.”

He goes on to say:

“When you are an innovator, that’s awesome. Just like Instagram deserves all the credit for bringing filters to the forefront. This isn’t about who invented something. This is about a format, and how you take it to a network and put your own spin on it.”

What’s Next for Facebook and Instagram?

Of course, the big problem here is admitting any kind of inspiration or imitation from a competitor. In our litigious society, that could spell disaster — whether you’re Robin Thicke simply trying to pay homage to Marvin Gaye, or whether you’re Apple Inc. (NASDAQ:AAPL) suing any company making anything that remotely resembles an iPhone.

Instagram was acquired by FB stock for $1 billion, and that billion-dollar payday is what many tech entrepreneurs are chasing. If they have to get it in a court of law, then so be it.

Instagram users just topped 500 million, and it continues to move into advertising aggressively with the goal of driving revenue and profits for its corporate parent. Snapchat may want to dip into those coffers via a lawsuit, or they simply may want to prove a point by defending their turf against a competitor in the public forum as well as in a court of law.

As for me, I have no stake in FB stock personally but I seriously hope Snapchat simply sees this as a tremendous compliment and doesn’t resort to lawyering up. The interviewer who swung by Instagram headquarters, Josh Constine, puts it best at the end of his TechCrunch piece:

“With users, investors and job candidates all watching, no one is willing to fess up that another company did it right, and there was no better way to reinvent the wheel. You could polish it differently and pretend that was innovation instead of optimization. The press would ding you. Yet in the end, if the product worked and felt useful, people would adopt it, and in techland, growth is king.

But finally, with Systrom, we’ve found someone seemingly resistant to the sickness of pride, and hopefully he can inoculate others so they cite their sources and practice the transparency so many preach.”

Sounds about right.

Jeff Reeves is the editor of InvestorPlace.com and the author of The Frugal Investor’s Guide to Finding Great Stocks. Write him at editor@investorplace.com or follow him on Twitter via @JeffReevesIP. As of this writing, he did not hold a position in any of the aforementioned securities.

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Article printed from InvestorPlace Media, https://investorplace.com/2016/08/fb-stock-facebook-instagram-stories-snapchat-nasdaq/.

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