Facebook will pay $1 billion for Instagram, a 2-year-old photo-sharing application developer, in its largest-ever acquisition just months before the social media website is expected to go public, reports Yahoo!.
Mark Zuckerberg, founder and CEO of Facebook, posted about the transaction on his Timeline: “I’m excited to share the news that we’ve agreed to acquire Instagram and that their talented team will be joining Facebook.”
Instagram is a social network built around photography, offering mobile apps that let people add quirky effects to their smartphone snapshots and share them with friends.
Instagram has 30 million users who upload more than five million photos a day, even though it was available for onlyApple devices until last week, when the company released an Android app, according to The New York Times.
Instagram’s popularity has shot up in recent months, so the company’s leadership were thinking over possible strategies to expand the service into a fully featured social network – much like a photo-driven, stripped-down version of Facebook, Twitter, or even Path.
The deal, a closely kept secret at the tiny start-up, is expected to close this quarter.
“For years, we’ve focused on building the best experience for sharing photos with your friends and family. Now, we’ll be able to work even more closely with the Instagram team to also offer the best experiences for sharing beautiful mobile photos with people based on your interests,” Mark Zuckerberg said.
“We will try to learn from Instagram’s experience to build similar features into our other products. At the same time, we will try to help Instagram continue to grow by using Facebook’s strong engineering team and infrastructure,” he also wrote.
Instagram, with roughly a dozen employees based in San Francisco, was reportedly in the process of wrapping up a $50 million funding round last week from investors including Sequoia Capital. Facebook will acquire Instagram’s entire team.
Some fans expressed their concerns about the fate of Instagram, since Facebook has bought several small start-ups to grab their talent and then shut down their original offerings.
But both Mr. Systrom and Mr. Zuckerberg stressed repeatedly in separate blog posts that Facebook planned to keep Instagram up and running as a separate service, at least for the time being.
“It’s important to be clear that Instagram is not going away. We’ll be working with Facebook to evolve Instagram and build the network. We’ll continue to add new features to the product and find new ways to create a better mobile photos experience,” wrote Instagram CEO Kevin Systrom.
“The Instagram app will still be the same one you know and love. You’ll still have all the same people you follow and that follow you.You’ll still be able to share to other social networks. And you’ll still have all the other features that make the app so fun and unique,” he said.
The financing round valued the photo service at about $500 million. With Facebook’s purchase, one week later, that investment doubled in value.
The Instagram deal is expected to resemble Google Inc’s $1.65 billion acquisition of video service YouTube in 2006. YouTube retains its own offices in San Bruno, California, and largely operates independently of Google.