Facebook has announced that it will acquire Instagram, the popular photo-sharing smartphone app, in a $1bn cash-and-stock deal.
Instagram allows smartphone users to take and share photos with one another and apply special effects to their pictures to give them a vintage look. In its two-year history it has grown fast, gathering 30 million users although it has little by way of revenues and it has only 13 employees.
Mark Zuckerberg announced the acquisition saying he was ‘excited to share the news that we’ve agreed to acquire Instagram and that their talented team will be joining Facebook.’
Patrick Moorhead, analyst at Moor Insights & Strategy in Austin Texas, told the Today programme’s Simon Jack that this was a “tremendous investment no matter which way you look at it”. He went on to say that Facebook was interested because “there was a potential that people would defect over to Instagram” and were looking at the deal “as risk mitigation to their IPO (initial public offering)”. “There are two holes they need to plug before going public,” he said going on to explain that these are “a competitive threat from a small upstart like Instagram and the current lawsuit it has with Yahoo.”
Zuckerberg went on to say “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 wrote, noting that his company is “committed to building and growing Instagram independently.”
Instagram won’t be solely a Facebook-centric service, he wrote. Instagram users will still be able to post to other social networks, and if an Instagram user doesn’t want to share his or her photos on Facebook, that’s okay with Zuckerberg. Intagram users will also still be able to follow, and be followed, separately from their Facebook presence.
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