Facebook has announced a billion-dollar deal to buy the startup behind the popular smartphone photo-sharing app Instagram.
Billionaire boss Mark Zuckerberg will pay $1bn (¤750m) for Instagram, a two-year-old photo-sharing application developer, in its largest-ever acquisition just months before the number one social media website is expected to go public.
The price was stunning for an apps-maker without any significant revenue, even when measured by the lofty standards of Silicon Valley, where startup valuations have soared in recent years.
It highlights the rising stakes in the social networking market in which services such as Facebook need to constantly excite consumers with new features and mobile applications.
By acquiring Instagram, Facebook may also have sought to absorb a potential rival or at least prevent it from falling into the hands of a major competitor like Twitter or Google Inc.
"Anytime you see a social platform that's growing that quickly, that's got to be cause to be nervous," said one expert.