Did Facbeook just waste a billion dollars on Instagram?

We get it—a billion dollars is cool. You know what’s not cool? Spending a billion dollars on a company, only to have people abandon it as soon as you write the check (or the stock offering, as the case may be).

As soon as Facebook announced the deal, the acquisition was met with groans from social media users wary of Facebook’s increasingly Goliath-like status. Conspiracy theories popped up that the real reason Facebook bought Instagram was to better track users’ locations (more Instagram users seem to tag their photos with locations than on Facebook uploads) and this would better help them sell targeted ads in the future.

Privacy issues aside, some users just didn’t like the idea of their Instagram account, which they regarded as a smaller, more intimate digital transaction, being sucked up by the behemoth of Facebook. Personally I noticed friends on Path lamenting that they’d be shutting down their Instagram accounts, and Mashable conducted a poll in which almost 60% said they disapproved of the deal and that “Facebook will find a way to screw Instagram up.” Even as Instagram’s new Android version saw millions of new signups there was talk of an an exodus from the app, and Mashable even ran an article about how to shut down your Instagram account while saving all your photos.

Now Apple marketing chief and long-time Instagram evangelist Phil Schiller says that Instagram has “jumped the shark” by selling to Facebook.

In an email to Mashable Schiller echoes what my friends on Path seem to be saying: “One of the things I really liked about Instagram was that it was a small community of early adopters sharing their photographs.” Now that it’s owned by Facebook, it no longer seems intimate, or cool.

Of course, this may be motivated by Instagram’s recent release of an Android version. Apple obviously wants to see a product lose its luster once it leaves Apple’s exclusivity to seep out into the broader world. Schiller may just be doing his part to carry the torch of Steve Jobs’ “thermonuclear war” against Android.

Still, the Instagram backlash is being echoed by other people than Apple executives. It may be that Facebook’s size has become its own sort of liability. It’s now a stomping grounds for “weak ties,” as Malcolm Gladwell calls them, with everyone you’ve ever met, rather than strong ties with close friends. If Facebook effectively kills what has been Instagram’s selling point—intimacy—by virtue of owning it, it will have just wasted one hell of a lot of dough.