Woah! Out of nowhere, Facebook has acquired Instagram for $1 billion. The compensation is in cash and stocks. Instagram will however remain a standalone app from Facebook but they will be integrated sometime in the future. The transaction should go through this quarter pending some standard closing procedures. Instagram has 27 million registered users on iOS devices and it was released on Android last week and it was downloaded 1 million times on the very first day (within 24 hours). Now users may be able to share photos on Instagram and on Facebook, oh wait, they already used to to do that!
Zuckerberg, shared this post on Facebook today and announced the news himself that Facebook has agreed to acquire the Photo-Sharing service. He also added that the entire Instagram team will joining Facebook. Over at Instagram, CEO Kevin Systrom also announced the same news confirming “You’ll still be able to share to other social networks” which was also mentioned by Zuck in his post. Notably, Zuckerberg also writes, “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. We don’t plan on doing many more of these, if any at all.”
The WSJ reports Mark Zuckerberg’s Timeline post about buying Instagram had over 34,000 likes after just 11 minutes.
I am shocked as you are and so were the Instagram investors. Before the acquisition, Instagram closed a $50 million Series B round from Sequoia, Josh Kushner’s Thrive Capital, Greylock and Benchmark at a $500 million valuation. The round was led by Sequoia, as first reported by AllThingsD’s Liz Gannes. Investors, many of whom didn’t know about the Facebook acquisition, literally doubled their money (which was wired to Instagram last Thursday) overnight. Many are comparing this buy to Google’s $1.3 billion acquisition of YouTube, which makes sense. Facebook, which was rumored to be building its own standalone photosharing, is well aware that much of the “stickyness” of the platform revolves around photosharing, especially via mobile.