In many ways, one could say that Facebook has reached a bit of a tipping point in its life:  Its recent filing to go public has been a symbolic point of change- formally quelling its identity as a start up, and solidifying its place as a major, legitimate, publicly-traded business.

Facebook also recently disclosed that its user base has reached over 901 million,  with 1 billion being a plausible prediction of the end of the year.

My, how Facebook has grown. It’s the largest social network by far, easily eclipsing Twitter’s 500 million userbase. It’s as close to ubiquity as its going to get.   But where does it go from here?  

Inevitably, Facebook’s userbase growth rates will plateau and trail the rates of overall internet adoption.  As a soon-to-be publicly-traded company, it’s now under the scrutiny of the public and its investors when it comes to growth.  When you’ve maxed out your market share, where do you look for growth?

Cue the Instagram acquisition.  Facebook’s staggering $1 Billion bid for the mobile startup is astounding, but it makes sense. Most Instagram users are already on Facebook, so it’s not about acquiring more users.  What it is about, however, is promoting activity within its existing userbase.  In its recent S-1 filing, Facebook purchased Instagram “as independent mobile applications to enhance our photos product offerings and to enable users to increase their levels of mobile engagement and photo sharing.”

By acquiring apps and services that compliment its existing experience, Facebook is promoting increased user activity and content creation.  Instagram’s 40-million-strong user base now serves to enrich facebook’s ecosystem through:

• Content creation:  all the photos taken on instagram that are shared on Facebook
• Engagement: comments, likes, and sharing on Facebook
• External exposure: via sharing instagram content on Facebook, Twitter, and Tumblr

This concentration on user engagement is explicitly tied to Facebook’s revenue model.  Instagram-related activity on Facebook increases the time spent on the site, the number of pages viewed, and most importantly, the exposure to ads.

The more time people spend on Facebook, the more ads they are exposed to.  The more ads they are exposed to, the more Facebook can charge. That equals more revenue through CPC’s and CPM’s.

With an already-ubiquitous userbase and tons of cash to spend, we predict that you’ll be seeing quite a few more acquisitions that play into this focus on increasing organic user activity.

I wonder, however, what Facebook’s users will think of this new active-user-based acquisition strategy. Do Facebook users want Facebook to become a giant sum of all these parts? Is Facebook’s core UX design capable enough to handle its expanding products and services?  What do you think?