Facebook to snap up Instagram photo app in $1bn deal
FACEBOOK will pay $1bn in cash and stock for photo-sharing application Instagram, making its largest-ever acquisition months before the No 1 social media website is expected to go public.
The popular Instagram application, which allows users to add filters and effects to pictures taken on their smartphones, has gained about 30 million users since it first launched.
Set up just two years ago, Instagram has grown to become one of the most popular applications running on Apple's iOS operating system. It is known for the filters and effects that users can apply to pictures before sending them on to their networks over services such as Facebook, Twitter and Tumblr.
Despite a loyal and active following, Instagram lacks any significant revenue sources. The start-up, with roughly a dozen employees based in San Francisco, reportedly closed a $50m funding round last week from investors including Sequoia Capital, which valued the company at $500m.
Facebook, which is expected to launch a $5bn initial public offering in May, will acquire Instagram's entire team.
In a break with previous acquisitions, Facebook said it would not fully integrate the Instagram service into its own site, but would continue to grow it "independently".
In a blog post, Mark Zuckerberg, Facebook's chief executive, wrote: "Millions of people around the world love the Instagram app and the brand associated with it, and our goal is to help spread this app and brand to even more people.
"This is an important milestone for Facebook because it's the first time we've ever acquired a product and company with so many users. We don't plan on doing many more of these, if any at all."
The deal could signal a more open approach to connecting with other internet services than Facebook has adopted in the past.
Users of Instagram will be able to continue posting their pictures to other social networks or to build networks on the site that are different from their Facebook networks, Facebook said.
"These and many other features are important parts of the Instagram experience and we understand that," Mr Zuckerberg wrote.
The deal, a closely kept secret at the tiny start-up, is expected to close this quarter. (Reuters)