Facebook 'likes' Instagram with $1B price tag

Why wait for the IPO? Facebook snaps up the hugely popular photo-sharing app -- and vows to keep it independent.

Rafe Needleman Former Editor at Large
Rafe Needleman reviews mobile apps and products for fun, and picks startups apart when he gets bored. He has evaluated thousands of new companies, most of which have since gone out of business.
Paul Sloan Former Editor
Paul Sloan is editor in chief of CNET News. Before joining CNET, he had been a San Francisco-based correspondent for Fortune magazine, an editor at large for Business 2.0 magazine, and a senior producer for CNN. When his fingers aren't on a keyboard, they're usually on a guitar. Email him here.
Rafe Needleman
Paul Sloan
3 min read

Facebook, just weeks away from what's expected to be the biggest Internet IPO in history, today signed a deal to acquire the hugely popular photo-sharing smartphone app Instagram in a cash and stock deal valued at about $1 billion.

Facebook has made a slew of acquisitions to date, but nothing of this scale. But Instagram is a 2-year-old startup that comes with some 33 million users and a growth rate that's the envy of Silicon Valley.

Photo-sharing has been a big part of Facebook's success, and CEO Mark Zuckerberg is now making a big bet that it will be a critical part of its future.

In a statement that Zuckerberg posted on Facebook, he said:

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.

At the same time, Zuckerberg explained that Facebook was not about to swallow up Instagram. In fact, he said that Facebook would build Instagram independently.

We believe these are different experiences that complement each other. But in order to do this well, we need to be mindful about keeping and building on Instagram's strengths and features rather than just trying to integrate everything into Facebook.

In other words, let's not piss off the millions of passionate Instagram users.

Kevin Systrom, the CEO of Instagram, also sought to reassure Instagram fans. In his own post, he wrote that "Instagram is not going away."

By selling to Facebook, Systrom said, "our goal is to help spread this app and brand to even more people."

Instagram is sort of like Twitter for mobile photos. Users start by editing and appling filters to their photos, right on their smartphone. Then they post them, allowing other users to comment or "like" them. The deal is, of course, a huge win for the startup, which has only about a dozen employees and got its start by two Standford University graduates. Last week, Instagram launched its Android version of the app, which led to 1 million downloads on the first day.

Zuckerberg said that "the fact that Instagram is connected to other services beyond Facebook is an important part of the experience."

He said Facebook would keep many features, such as the ability to post to other social networks, and even the the ability to not share your Instagrams on Facebook if you want. In addition, you'll be able to keep your Instagram followers separate from your Facebook followers.

Zuckberg called this purchase an "important milestone" for Facebook since it's the first time the social network has ever acquired a product and company with so many users.

Should we expect more big acquisitions from Facebook? Zuckerberg said no.

"We don't plan on doing many more of these, if any at all," he wrote. "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.

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