Twitter wanted to buy Instagram, but won't copy Facebook

Twitter expressed an interest in buying Instagram long before the photo sharing app was snapped up by Facebook for $1 billion, but the company will not be looking to make a rival acquisition, according to chief executive Dick Costolo.

Several people briefed on the matter claim that Twitter co-founder Jack Dorsey, who invested in Instagram in February 2011, tried to purchase the mobile app months before the deal with Facebook was signed. Dorsey was once an avid user of Instagram, but no longer uses the app, according to a report in The New York Times.

A Twitter spokesman declined to comment.

The news might explain why Facebook paid such a high price for Instagram, which currently has just 13 employees and makes no money. Ovum analyst Mark Little said at the time that the price of $1 billion was “inflated”, but added that the price tag indicated an “anti-competitive element”.

Instagram is an app that allows users to add vintage effects to smartphone photos. It also serves as a standalone social network, allowing users to share their photos with friends outside the boundaries of Facebook and Twitter. The app will be valuable to Facebook, not least because of its 30 million-strong user base.

“These users can now be used to generate revenue for Facebook and, most importantly, not for competitors such as Google or Twitter,” said Juniper Research analyst Charlotte Miller in a recent blog post.

During a visit to Tokyo earlier this week, however, Twitter's chief executive Dick Costolo said he would not push his company to seek similar acquisitions.

“I think that sometimes there is a tendency for companies to react to events in the marketplace that are inconsistent with their strategy… and I think that tendency is a mistake,” Costolo told Japanese reporters. “Copying it is never a good idea, at least history would say it’s not a good idea.”

According to a report in The Wall Street Journal, Costolo promised that Twitter would execute on its existing strategy, rather than trying to follow the market. Part of that strategy is to focus on evolving its API to allow third party companies to build their own products and services into Twitter, he said.