Can Amazon Help Snap Beat Instagram?

Snap Inc. (SNAP), the parent company of photo and video sharing app Snapchat, is reportedly working with Inc. (AMZN) to add a feature called Visual Search, which will allow smartphone cameras to identify products, songs and item barcodes and then link users to product listings. The unreleased feature was spotted in the code of Snap’s Android app by an app researcher who tipped of TechCrunch.

Investors sent shares of Snap rising on the news Monday as investors hope the potential feature could boost revenue after the firm reported a $385 million loss last quarter, as well as hedge against the rising dominance of Facebook Inc.’s (FB) Instagram. (See also: Snap Inc. to Launch Gaming Platform This Fall.)

Deal Could Help SNAP Stave Off FB 

Facebook has been called out for copying many of Snapchat’s features, most notably within its burgeoning Instagram platform. Facebook CEO Mark Zuckerberg’s strategy seems to be working, as Instagram’s rival Stories now has double the number of users and is growing six times faster than Snap’s application. Last month, shares of Snap fell 5% in one day on a bearish note from Cowen analysts, citing various surveys to estimate that Snap’s daily engagement fell 7% over last year and that the platform ranked the lowest in a survey of ad buyers. 

A partnership with Amazon would work to differentiate Snapchat’s platform from social media competitors by diversifying into unique object identification and navigation-related features. It could also provide Snapchat with affiliate bonuses for purchases made on the global e-commerce platform. While no such agreement has been confirmed, many companies such as Wirecutter have been able to stay afloat by relying on this referral revenue from linking to Amazon products, as noted by Business Insider. Snapchat lists about 191 million daily users, which could mean big bucks for the company if the partnership does materialize. 

Shares of Snap are lower about 2% on Tuesday on news that Facebook is entering the augmented reality (AR)  advertising space, where Snapchat has been the leader. Facebook users will able able to use their mobile device’s camera to participate in AR experiences that show up in their News Feed. (See also: Snap Ranks Lowest on Various Key Attributes: Cowen.)

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