Facebook has agreed to buy photo sharing network Instagram for $1 billion U.S. in a combination of cash and stock, the company announced Monday.
It's Facebook's biggest acquisition ever, in both price and reach. With around 30 million active users, Instagram has the largest audience of any startup Facebook has purchased, Facebook CEO Mark Zuckerberg said in a blog post.
Founded in 2010 by Mike Krieger and Kevin Systrom, Instagram has just a handful of employees supporting its wildly popular photo app, which lets users add distinctive filters and visual flair to photos they've snapped on their smartphones.
The long-awaited Android version, released last week, racked up more than one million downloads in just 12 hours. The launch also met a backlash from iPhone users, who enjoyed having an exclusive hold on the stylish service.
Just one month ago, Instagram's creators claimed they had no interest in selling.
Even some of Instagram's investors were startled by the takeover. Late last week, Instagram closed a $50-million U.S. financing round that valued the company at $500 million U.S., according to a source involved in the deal.
Those investors essentially doubled their money, instantly.
Facebook likes to scoop up hot startups, kill their products, and redeploy their staff on other projects. That's definitely not the plan for Instagram, all the players insist.
Facebook, which is in the process of going public, ended 2011 with a cash stash just shy of $4 billion U.S.
Instagram is a free app and doesn't charge for any of its services. The company's founders insisted that would come in time, once they'd built a sizeable user base.
Instagram was their second stab at a product. Before "pivoting" to create the wildly popular photo sharing app, the crew was working on a check-in service called Burbn.
