Instagram had no model for bringing in revenue when it was acquired by Facebook. Now, the app makes money the same way Facebook does: by selling advertisements that look like regular posts in the app’s main feed and in disappearing “stories” posts. Facebook has increased the frequency of ads on Instagram in the past couple of years, to help bolster the company’s sales as Facebook’s news feed becomes more saturated with marketing posts.
California-based Facebook, the world’s largest social-media company, is currently under antitrust investigation by the US Department of Justice, the Federal Trade Commission, and attorneys general across the country. Instagram’s sizeable contribution to the company’s overall sales may help explain why Chief Executive Officer Mark Zuckerberg has objected to calls to break up Facebook, which have been raised by US Senator Elizabeth Warren, a Democratic candidate for president, and others.
Some critics, including Facebook co-founder Chris Hughes, have said Zuckerberg’s plan to more closely unite the company’s different apps, which also include WhatsApp and Messenger, could make it harder to break up from a technical standpoint.
Alphabet’s YouTube ad sales report earlier this week added clarity on the business after years of speculation, but the number was ultimately disappointing for analysts who expected greater rewards for Google from consumers’ shift to watching videos online. Google didn’t disclose YouTube’s costs, though the unit has said it shares more than half its advertising revenue with video creators and spends heavily on video bandwidth. Unlike YouTube, Instagram doesn’t share its ad sales with users who post content on its app.