SOCIAL media website Facebook is paying $1bn in cash and stock for Instagram, a photo-sharing application developer, it was confirmed yesterday.
The Instagram application has gained about 30 million users since it launched in January 2011.
It allows users to add filters and effects to pictures taken on their iPhone and Android devices, which they can share with their friends.
Instagram launched its Android app last week, and has attracted more than one million downloads already.
Instagram is “a property that would have been amazingly valuable to not just Facebook, certainly Twitter was in the hunt as well,” said Lou Kerner, founder of the Social Internet Fund.
He added: “I’m sure Google was interested as well. So to some degree an acquisition like this is both offensive and defensive. “
Instagram, which has around a dozen employees based in San Francisco, closed a $50m funding round last week. Investors included Sequoia Capital and Greylock Partners, according to a source cited by Reuters news agency.
Facebook, which is expected to raise $5bn via the largest Silicon Valley initial public offering by May, will acquire Instagram’s entire team.
“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,” Facebook chief executive Mark Zuckerberg said in a blog post. “We don’t plan on doing many more of these, if any at all.”