Whoa. I thought it was going to be Twitter, given the end-user de facto integration between the two social media services. Alas, it was Facebook that acquired mobile photo-sharing site Instagram … for the whopping price of $1 bn.

According to Business Insider, Facebook bought Instagram using both cash and stock. This means that the shareholders will benefit twice: first through the acquisition and in a month or so, when Facebook goes public.

In January 2011, Instagram had 1 mn users. Now, it has more than 30 mn. Needless to say, there’s some value here for Facebook to tap, especially when it develops its mobile advertising solution.

This is an interesting move for Facebook not just because I thought Instagram was a natural buy for Twitter but because Facebook, historically, hasn’t been a big deal-maker. But, it does make sense given the greater emphasis Facebook has put on photo sharing on its own platform, not to mention its own deficiencies in the mobile space.

Integrating the people of Instagram into its organization shouldn’t be too difficult (there are only 13). The technology isn’t a different story, but this aspect plays to Facebook’s strong suit.

I guess Instagram isn’t going to raise $50 mn at a $500 mn valuation after all …

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Source: Business Insider

Photo: @lauriedeprete via Instagram