Facebook has agreed to purchase photo-editing app Instagram for a whooping $1 billion dollars. The news was first posted on the Facebook blog followed shortly by a post on the Instagram blog. Instagram, which was started barely 18 months ago, has grown to become one of the most-used photo editing apps of all time.
The company which until only recently had only four employees, had just closed a round of funding in which they raised $50 million and that valued the company at $500 million. The company now has 13 employees and has been slow to build its team as it feels out which revenue model would best suit its application.
Instagram currently has 27 million active users and this could be a big reason why Mark Zukerberg may have opted to buy the app because Instagram co-founder and CEO Kevin SystroM had alluded to the fact that they would be working on building a global business on the back of the app.
Facebook has been known to have inadequacies on the mobile front and has in the past purchased mobile startups such as Snaptu for the engineering talent, something that has not been welcomed by startup supporters who have said this was more like neutralizing the competition rather than taking up and offering a new product.
This may very well be the case with Instagram but in this case, Facebook will not be discontinuing the service but will instead work together with the current team to integrate the two services more tightly.
At the moment, Facebook users upload 250 million photos to the site each day and this has become somewhat of a boon for Facebook but also a threat as all it would have taken for Instagram to “steal” these Facebook users would have been to send them to a different social network, and this is what Facebook has successfully averted through their acquisition of the company.
It now remains to be se how Facebook utilizes this newly acquired platform and whether it will just be another case like Snaptu where Facebook was more intent on killing off the competition. Either way, all 13 employees are set for a hefty pay off when the deal comes through.Tags: facebook, Instagram, Kevin Systrom, Mark Zuckerberg