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4/9/2012
02:27 PM
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Facebook Captures Instagram

Facebook shells out a reported $1 billion to expand its mobile presence and assure that it remains competitive in photo sharing.

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Facebook on Monday acquired Instagram, the popular mobile photo sharing app and the company behind it, for $1 billion dollars, a purchase that underscores the growing importance of mobile apps.

The deal was announced by Kevin Systrom, CEO of Instagram, on the company's website.

"Every day that passes, we see more experiences being shared through Instagram in ways that we never thought possible," Systrom wrote. "It's because of our dedicated and talented team that we've gotten this far, and with the support and cross-pollination of ideas and talent at a place like Facebook, we hope to create an even more exciting future for Instagram and Facebook alike."

Systrom did not disclose a price, which Wall Street Journal puts at $1 billion. Facebook, which is preparing an initial public offering that's expected to raise $10 billion, did not respond to a request to confirm the amount. At that price, the deal is Facebook's largest acquisition to date.

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Systrom insists that Instagram will not go away and that future revisions will bring new features to its product, presumably features related to Facebook.

Facebook CEO Mark Zuckerberg said in a blog post that his company wants to see Instagram continue to grow as an independent brand and that the service's connections beyond Facebook will remain in place. "We plan on keeping features like the ability to post to other social networks, the ability to not share your Instagrams on Facebook if you want, and the ability to have followers and follow people separately from your friends on Facebook," he said.

Zuckerberg characterized the deal as a milestone for the company because it was the first time Facebook had bought a business with so many users. "We don't plan on doing many more of these, if any at all," he said.

An Internet entrepreneur, who was speaking with InformationWeek on Monday about the imminent launch of his own company when the deal was announced and asked not to be named, characterized the move as primarily defensive, adding that it was also about talent acquisition.

Facebook believes that it could be vulnerable to photosharing services, he suggested.

Facebook in February upgraded its photo sharing interface, a move seen as a response to the Google+ photo sharing experience.

Instagram launched its iOS app in October, 2010. Five days ago, it introduced a version for Android phones and noted that over 30 million users have joined its photo sharing network.

With Instagram, Facebook's mobile reach will improve. Though the social network already has a timeline-oriented mobile app, it should benefit from being able to offer its users a more visual mode of interaction.

Facebook will also get much more user data. In a Twitter post, privacy advocate Christopher Soghoian suggests that those made uncomfortable by this prospect may wish to utilize Instagram's account deletion option.

Beyond the expected congratulatory tweets, there was some cynicism about the deal as well. Twitter user pourmecoffee suggested this possible headline to convey the news: "Facebook buying Instagram to provide seamless integration between photos of your dinner and the people who don't want to see them."

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