Facebook, wary of someone doing to them what they did to MySpace, was going around buying anyone who might be the next thing. It wasn't necessarily clear that Insta would blow up in the way it did but it was clear that was Facebook's motivation for buying.
> Though Facebook is known for smaller acquisitions, Instagram’s surging momentum likely compelled the social network to swiftly put together a billion-dollar offer.
Tech valuations were lower across the board in 2012. Meta 15x'd its market cap since then, and Google 10x'd its valuation, despite both companies still holding essentially the same market position today as they did back then. If anything both have a weaker position today than in 2012.
Meta's position is much better, they own Insta and Whatsapp now! Diversification!
Google rise makes less sense but their position as king of search seems even more concrete than ever before (although LLMs might threaten that if they don't stay competitive I guess).
Also "tiny 1 billion dollar acquisition" is not how I'd characterize what was the largest acquisition FB had made up to that point: https://archive.nytimes.com/dealbook.nytimes.com/2012/04/09/...
> Though Facebook is known for smaller acquisitions, Instagram’s surging momentum likely compelled the social network to swiftly put together a billion-dollar offer.