After the initial hype of its IPO settled down, many mobile app developers were left wondering where Snapchat could go next. User growth was slowing even before the company went public, and its main competitor Facebook has been steadily cloning its defining features ever since Snap Inc. CEO Evan Spiegel turned down Mark Zuckerberg’s offer to purchase the company for $3 billion. Instagram Stories, a direct take on Snapchat’s popular Stories feature, now has more active daily users than Snapchat, and just last week, Zuckerberg announced Facebook’s big augmented reality aspirations at the annual F8 developers conference, revealing the ambitious end goal all that Snapchat copying is building toward.
App developers want to know: What’s a startup to do when its big innovations are shamelessly copied by a ubiquitous platform with seemingly infinite resources and a user base that tops one billion? So far Snap has done little besides mocking Instagram with a pretty funny April Fool’s Day filter, but last week the startup took what could be interpreted as a step toward fighting back Facebook’s looting campaign. The company reportedly cut a $7.7 million deal with Israeli Instagram competitor Mobli for a geosticker patent. That staggering amount is thought to be the highest amount ever paid for a patent in Israel, but for Snap, it may be a small price to pay to ensure its survival.
When Snap filed for its IPO, 90% of its reported revenues — an impressive $360 million sum —
came from geofilters. To lose that income stream from advertisers would obviously be devastating for the company. Securing the patent will help Snap protect that revenue by steering clear of a lawsuit with Mobli. But more importantly, the patent helps the startup prevent Facebook and other competitors from further encroaching on its unique game. Mobile app developers in New York City, London, Chicago, and a few other cities know that Instagram has recently added Location Stickers, its own version of geofilters. This patent could dissuade Facebook from expanding the Location Stickers to more cities — or even cause them to scrap the whole initiative. At the very least, Snap is putting a check on the rampant borrowing of its innovations, a necessary move if the social media startup wants to stay viable.