Snapchat maker Snap acquired a patent for Geofilters from Israel-based Instagram competitor Mobil that Facebook was also looking into acquiring, industry sources told TechCrunch. This purchase made Israeli tech history with Snap setting a new record for the highest price paid for an Israeli technology patent, beating Google's $2.7 million purchase of a patent for Google Maps. Mobil patented the idea of geo-photo filters back in 2012 and given that it may not have a use for the patent anymore due to Instagram's dominance in its field, Mobil's co-founder Moshe Hogeg sold the patent to Snap for $7.7 million. This patent, called "Methods and Systems of providing visual content editing functions," covers the server-side application of Geofilters. The major advantage of applying Geofilters server-side is to prevent numerous updates of the social network's applications for every new Geofilter designed and also reduces the size of the application as there is no need to store the filters within the app itself.
While $7.7 million may be a big price to pay for a single patent, considering that the usual price for patents sold in Israel ranges from $10,000 to around a million dollars, the ownership of the patent, no matter how expensive it may be, is reportedly important for the future of Snap's operations. Geofilters, which are location-based filters applied to photos, are sold to advertisers and currently comprise the majority of Snap's revenue. According to documents filed by the company as requirements for its IPO, Geofilters accounted for $360 million, or 90 percent of the company's $400 million revenue in 2016. If the owners of Mobil succeeded in selling the patent to Facebook, that course of action might have made Snap vulnerable to litigation that could have prevented the social network from using its primary revenue generator.
This event marks another chapter in the long-lasting rivalry between Facebook and Snap. In order to compete with Snapchat, Facebook recently launched a number of Snapchat-inspired features like Instagram Stories. Instagram Stories is currently a major problem for Snap and its social media service, as that sole feature attracts more daily active users that its entire platform. Meanwhile, Snap has attempted to poach executives and other employees from Facebook, though with varying degrees of success.