Facebook stunned many people when it agreed to buy Instagram for $1 billion. The recent deal is the company’s biggest to date, and some worry that Facebook may have paid too much. Instagram is an online photo sharing site led by CEO Kevin Systrom. The company was launched in 2010. What makes the deal with Instagram particularly interesting is that the company has just 13 employees and no office furniture or real workplace. Instead, employees work out of a conference room in Silicon Valley. Even more troubling to some is the fact that Instagram is now worth more than the New York Times, yet it has no revenue. During its short existence, Instagram has proved to be quite popular. Its 30 million users include many celebrities like Justin Bieber and Kim Kardashian. Some users reacted to the news of the acquisition with concern that the product will change under Facebook management and that the change will not be for the better. Study Note This video explores the importance of corporate governance and checks and balances. Discussion Questions 1. The $1 billion price tag on Instagram caught many people by surprise. Did Facebook pay too much for the online photo sharing site? Was Facebook responsible in its decision making? 2. As a shareholder in Facebook, how do you feel about Facebook’s acquisition of Instagram? Has Facebook met its obligations to shareholders? 3. At the time of its acquisition of Instagram, Facebook was still a privately held company. Had it been a publically held organization, do you think Facebook would have paid the $1 billion asking price for Instagram? 4. What does your response to the question above tell you about corporate governance at Facebook? 5. What is Facebook’s responsibility to its employees? As an employee of Facebook, do you think your company made a wise move in paying $1 billion for Instagram?

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