Facebook spends $1 billion to buy Instagram

The world’s largest social network will acquire the hot new imaging network for $1 billion in cash and stock options.

“The total consideration for San Francisco-based Instagram is approximately $1 billion in a combination of cash and shares of Facebook. The transaction, which is subject to customary closing conditions, is expected to close later this quarter,” Facebook says.

Instagram is a mobile image sharing platform that grew to 30 million users in just 15 months on Apple’s iPhone, and which last week added an Android version of its app — and saw an immediate leap of millions of more new members.

“For years, we’ve focused on building the best experience for sharing photos with your friends and family,” says Facebook founder Mark Zuckerberg in a blog post on the acquisition. “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. We believe these are different experiences that complement each other.”

Instagram and CEO Kevin Systrom says he and co-founder Krieger started Instagram “to change and improve the way the world communicates and shares. We’ve had an amazing time watching Instagram grow into a vibrant community of people from all around the globe… Every day that passes, we see more experiences being shared through Instagram in ways that we never thought possible.”

Zuckerberg also notes the rareness of the transaction: “This is an important milestone for Facebook because it’s the first time we’ve ever acquired a product and company with so many users,” he says. “We don’t plan on doing many more of these, if any at all. But providing the best photo sharing experience is one reason why so many people love Facebook and we knew it would be worth bringing these two companies together.”

However, Zuckerberg says Instagram will remain an independent service, and keep its connections to competing platforms. “Millions of people around the world love the Instagram app and the brand associated with it,” he says, “and our goal is to help spread this app and brand to even more people… 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. …We need to be mindful about keeping and building on Instagram’s strengths and features rather than just trying to integrate everything into Facebook.”

“It’s important to be clear that Instagram is not going away,” Systrom confirms. “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. 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.”

 

Our take: The social power of photo sharing has long been a key aspect of Facebook’s huge growth and success — but the company was not getting the traction in mobile imaging that it had long established on the desktop. Instagram was proving that a new, simpler way of enhancing and sharing photos on the phone could quickly catch fire.

Facebook has long been rumored to be developing improved mobile imaging apps. Perhaps it proved simpler to buy a tried-and-tested tool instead of work in-house. But in our opinion, with this purchase Facebook is primarily heading off a possible social networking competitor, as Instagrams’ actual features and technology are likely not anything FB couldn’t have developed itself.

Also important: what significant percentage of Instagram’s users were not already FB members? (Yes, yes, Instagram had much more *active* users perhaps…)

Nonetheless, our congratulations to the Instagram team for a widely-admired imaging service, and now, for billion-dollar financial reward for the work.