SAN JOSE, Calif. — Facebook will spend $1 billion to acquire the popular mobile photo application Instagram, the firm said Monday.
The deal is the first major purchase by the world’s most popular social network of another online property with millions of users and comes as Facebook prepares for an initial public offering of stock later this spring.
“For years, we’ve focused on building the best experience for sharing photos with your friends and family,” Facebook founder and Chief Executive Officer Mark Zuckerberg said in a note. “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.”
Facebook will allow Instagram to keep its independence, including the ability to post photos to competing social networks such as Twitter, Foursquare, Tumblr and Google+, Zuckerberg said.
“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,” Zuckerberg wrote.
“These and many other features are important parts of the Instagram experience and we understand that. We will try to learn from Instagram’s experience to build similar features into our other products. At the same time, we will try to help Instagram continue to grow by using Facebook’s strong engineering team and infrastructure.”
The Instagram purchase, Zuckerberg said, is a milestone for the Menlo Park, Calif.-based company.
“We don’t plan on doing many more of these, if any at all,” he said. “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.”
More than 5 million photos are uploaded to Instagram each day, but the company, which is based in San Francisco, is still tiny. For much of its existence it has had fewer than seven employees, and it only recently topped 10. By way of comparison, Foursquare, another cellphone focused social network, has nearly 100 employees who serve 15 million users.
Instagram co-founders Mike Krieger and Kevin Systrom founded the company just more than two years ago to improve the sharing of smartphone photos. Instagram initially launched only for the iPhone, and only recently added an app for Android devices.
“It’s important to be clear that Instagram is not going away,” Systrom, who is also Instagram’s CEO, said in a blog post. “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.”
Instagram has more than 30 million registered users.
Last week, Instagram closed a $50 million financing round with several prominent investors, including Sequoia Capital, an early backer of Google; Thrive Capital, the firm run by Joshua Kushner; and Greylock Capital, an early investor in LinkedIn. The round valued the photo service at about $500 million, according to a person with knowledge of the matter.
With Facebook’s purchase, one week later, that investment has now doubled in value. Previously, the company raised $7.5 million in a round led by Baseline Ventures and Andreessen Horowitz.
Rebecca Lieb, an analyst at the Altimeter Group, described the Instagram acquisition as central to one of Facebook’s most urgent needs: how to make its service more appealing on smartphones.
“It’s easier to update Facebook when you’re on the go with a snapshot rather than with text,” Lieb said. “I think it’s definitely a mobile play.” Information for this article was contributed by Douglas MacMillan of Bloomberg News and by Jenna Wortham of The New York Times.
Business, Pages 21 on 04/10/2012