
The social network giant Facebook has bought Instagram – a profitless, two-year-old photo sharing application – for $1bn.
Instagram is a mobile sensation that counts Twitter co-founder Jack Dorsey among its backers and has been downloaded by over 30 million people.
When the Silicon Valley startup released a version for Android phone users this month, it was downloaded a million times in its first 12 hours.
The app allows people to share photos taken with their mobiles with friends on its own site and Facebook, Twitter or via text. Photographers can use a variety of filters to alter the look of their pics, with names like Lo-fi, Earlybird or Nashville, giving their images a vintage, old-world feel. Users can then promote pictures and add comments.
Facebook founder Mark Zuckerberg broke the news on Facebook. He said: "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. But providing the best photo sharing experience is one reason why so many people love Facebook and we knew it would be worth bringing these two companies together."
The company was founded in October 2010 by Kevin Systrom and Mike Krieger. At $1bn, the price is the highest for a profitless startup since Google bought YouTube for $1.65bn in 2006.
Asked about Instagram's history on the q&a site Quora recently, Systrom said he had "never expected the overwhelming response" the app had received. "We went from literally a handful of users to the #1 free photography app in a matter of hours."
Systrom said Instagram took just eight weeks to build and launch but was the result of over a year of work. "We decided that if we were going to build a company, we wanted to focus on being really good at one thing. We saw mobile photos as an awesome opportunity to try out some new ideas," he wrote.
After experimenting with a more complicated app, Systrom and Krieger scrapped the project and started with something far simpler. "What remained was Instagram. (We renamed because we felt it better captured what you were doing – an instant telegram of sorts. It also sounded camera-y)," he wrote.
At the South by Southwest conference in Austin this year, the pair announced that the company's iPhone app had nearly doubled its number of registered users since December, going from 15m users to 27m users.
This is the first time that Facebook, which is in the process of going public in a deal that could value the company at more than $100bn, has made a big acquisition.
Zuckerberg said the Instagram team would continue to operate as a separate company.
"We will try to learn from Instagram's experience to build similar features into our other products," Zuckerberg said in the statement. "At the same time, we will try to help Instagram continue to grow by using Facebook's strong engineering team and infrastructure."
The sale comes shortly after Zynga, the online games firm, paid $200m for OMGPOP, maker of Draw Something, an online version of Pictionary that in less than two months has been downloaded over 50m times. (Source: guardian.co.uk)