Facebook snaps up Instagram for big bucks

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Facebook snaps up Instagram for big bucks

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One billion dollars is the price that Facebook is to pay for Instagram, a two-year-old photo-sharing mobile phone app developer that has never made a profit and has just 13 employees.

It is however vastly popular, and it looks like Facebook Chief Executive Mark Zuckerberg has moved to grab up a potential rival or at least keep it from falling into the hands of a major competitor like Twitter or Google.

The purchase come just weeks before Facebook is expected to become a public company. “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,” Zuckerberg said in a blog post. “We don’t plan on doing many more of these, if any at all.”

The Instagram application has gained about 30 million users since it launched in January 2011. They have uploaded 400 million pictures, that is 60 images every second.

The app allows users to add filters and effects to their pictures taken on iPhone and Android phones and to share those photos with friends.

The deal highlights the rising stakes in the social networking market in which services such as Facebook need to constantly excite consumers with new features and mobile applications.

Instagram is “a property that would have been amazingly valuable to not just Facebook, certainly Twitter was in the hunt as well,” said Lou Kerner, founder of the Social Internet Fund.

“I’m sure Google was interested as well. So to some degree an acquisition like this is both offensive and defensive. It would be a highly leveragable asset for anybody who wanted to compete against Facebook.”