Facebook has bought mobile photo editing and sharing app company Instagram for US$1 billion.
Launched for iPhone in October 2010, Instagram has around 30 million users. Since being introduced for Android last week, the app has become the most-downloaded non-Google free app on Google Play, according to Bloomberg.
Facebook founder and CEO Mark Zuckerberg said in a statement that the company plans to retain the Instagram brand. “We need to be mindful about keeping and building on Instagram's strengths and features rather than just trying to integrate everything into Facebook,” he said.
The app allows users to edit photos taken on their mobile phones with a variety of vintage filters and gives them the option to share them via social networks. Zuckerberg said Facebook aims to learn from Instagram to build similar features into other products.
In a company blog post, Instagram CEO and co-founder Kevin Systrom said the plan is to evolve the technology and build up its network of users – who will still be able to share their images on social networks other than Facebook.
Instagram has just 13 employees, and was co-founded by former Google employee Systrom and Mike Krieger with an initial US$500,000 of seed funding from Andreessen Horowitz and Baseline Ventures.
Despite being a free app with no known source of revenue, the company attracted an additional US$7 million investment in February 2011 and a further US$60 million from Sequoia Capital last week, which valued the company at US$500 million.
Zuckerberg said that this is the first time Facebook has acquired a company with so many users and that it doesn’t plan to carry out many more acquisitions on this scale.
The deal will include cash and shares and is expected to close in the current quarter, subject to closing conditions.