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Facebook Snaps Up Instagram in $1 Billion Deal

Kevin Chupka
Executive Producer/Writer

Facebook announced its largest acquisition in the company's nine-year history today, buying photo-sharing app maker Instagram for $1 billion in cash and stock. Instagram's popularity has surged since its launch 18 months ago. Earlier this afternoon Facebook co-founder and CEO Mark Zuckerberg, posted the deal announcement on his own Facebook page that says in part:

"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."

The Daily Ticker's Aaron Task says the deal is particularly good for Facebook considering their "mobile platform isn't that great especially when it comes to photos…Facebook is concerned that they might lose some of that market to people like Instagram if they don't buy them."

Zuckerberg says his company will adopt some of Instagram's features into Facebook's existing infrastructure, but stressed that the popular stand-alone app will run as an independent company.

"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," writes Zuckerberg.

Instagram has amassed over 30 million iPhone users and just hit the Android platform last week. The app allows amateur photographers to snap photos and add any number of filters to alter the look and feel of the snapshot. It can then be posted to several different social networks including Facebook, Twitter, Flickr, Tumblr, and Foursquare.

The photo start-up has grown in large part because of an affinity for from a younger, hip crowd.

"Instagram is this cool young startup," says Task. "You can do a lot of stuff with your pictures on it and so it's got that hip quotient. Now I think that goes away with Facebook, but Facebook is trying to buy some of that hipness."

Breakout co-host Matt Nesto says a purchase like this is just the tip of the iceberg. "These newer social media sites are all trying to beat the man, but the man is starting to buy them. You think this is the beginning of a trend? I think it is," he says.

With skyrocketing valuations becoming the norm among web 2.0 companies, this $1 billion deal may soon be seen as a real bargain.

Who got the better end of this deal Facebook or Instagram? Will more deals in social media follow? Let us know your thoughts in the comments below or on our Facebook page.