Facebook Launches Strike at Snapchat With Instagram Direct

Aaron Pressman Yahoo Finance

(Update December 17, 2013: Users can delete Instagram Direct posts at any time, Ars Technica discovered, but there are no options for photos to automatically expire as in Snapchat.)

Facebook (FB) CEO Mark Zuckerberg showed Thursday that he knows how to get his Gates on Bill Gates, that is.

Zuck’s Instagram unit unveiled Instagram Direct, a new private photo and video messaging feature, one that’s not unlike rival Snapchat’s raison d’etre. And this just weeks after reports surfaced that Snapchat's 23-year-old CEO had — shockingly to some   rejected a $3 billion buyout offer from Zuckerberg.

Back when he was running Microsoft (MSFT), Gates famously ran over rivals, especially those who turned down offers to be purchased.

Poor little Netscape turned down Gates in 1994 and Gates moved on by adding a free Web browser to every copy of Windows, crushing Netscape’s only revenue stream. Before that, Gates opened talks with Stac Electronics to license their impressive data-compression technology. When the deal fell through, Gates simply added a copycat feature to MS-DOS. Stac later won a $120 million patent infringement from Microsoft, but by then it was too late for his company.

Snapchat has grown quickly on the popularity of its self-erasing selfies. Mixed in with their chats, users can send pictures to friends that can’t be made public (at least not easily). Snapchat users are sending 400 million messages a day, CEO Evan Spiegel disclosed last month.

With Instagram Direct, users can send copies of a picture or video to up to 15 other users directly without making the picture public or sharing with their other followers. And unlike on Instagram's usual posts, comments on the directly shared pictures flow among the sender and the recipients in real time, like a chat service.

There’s no option to disappear the photos, however, so Snapchat may still reign over the realm of photographic sexting. And Facebook has been trying for a few years to boost the popularity of its messaging service who remembers chatheads? so Instagram Direct isn't likely aimed just at Snapchat.

Instagram itself has become a key piece of Facebook’s strategy to attract more young people. The company admitted on its last quarterly earnings call that teenagers were becoming less engaged. But Instagram is still popular with the younger set, and the direct feature could keep them from jumping to Snapchat or other, livelier instant messaging platforms.

Facebook shareholders were immediately impressed with the new direct feature. They drove Facebook stock up 5% on Thursday, adding about $6 billion to the company’s market value. (Much of the gain, however, was also due to excitement that Facebook will be joining the S&P 500 and S&P 100 indexes.) Imagine how much investors might have celebrated if Snapchat had said yes to Facebook's initial offer.

Instagram itself was the recipient of a $1 billion buyout offer from Zuck last April. They took the money. If they hadn’t, maybe Zuck would have promptly unveiled a cool, new photo-sharing app.

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