Photo-sharing site Color Labs announces shut down

Startup was reportedly the target of an acqui-hire by Apple, which was supposedly more interested in the company's employees rather than its technology.

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Color Labs app Screenshot by Dara Kerr/CNET

Color Labs, the photo-sharing site that was the apparent target of an acqui-hire by Apple, is shutting down.

The Palo Alto, Calif.-based startup announced the development this evening via a banner notice on its Web site.

"Alert: We hope you've enjoyed sharing your stories via real-time video. Regretfully, the app will no longer be available after 12/31/2012," the notice reads.

The tale of Color is a bit of a mystery that continues to unfold. After initial reports that the troubled app maker was shutting down, it was reported that Apple was acquiring the company for a price described as being in the "high double digits." However, sources told Tech Crunch today that the price was $7 million.

It was suggested that Apple would be interested in some of the company's patents, which might tie in, and perhaps extend, the company's media-sharing tools. But Apple might have been more interested in Color's employees, reportedly snapping up about 20 engineers who would work on cloud-based projects for Apple, while the remainder of Color is "wound down."

The company has not publicly addressed the takeover reports, but a Color engineer recently changed his Twitter profile information to indicate he was now working at Apple -- information that quickly vanished with the engineer's account.

The acquisition was largely confirmed in a lawsuit filed today by one of Color's co-founding employees. Adam Witherspoon, who served as a quality assurance engineer at Color, sued the company and its CEO, Bill Nguyen, accusing both of creating an "extremely hostile, unsafe, and harassing atmosphere." The acquisition of Color by Apple served as a backdrop for much of Witherspoon's complaint.

CNET has contacted Apple for comment and will update this report when we learn more.