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Last updated on April 23, 2014 at 12:25 EDT

Instagram Finds New Home At Facebook

April 9, 2012

Michael Harper for RedOrbit.com

Facebook has just announced plans to buy the popular photo sharing app Instagram for a reported $1 billion.

Facebook CEO Mark Zuckerberg made the announcement this afternoon on Facebook, and the deal is expected to close later this quarter.

Even as they undergo the process of going public in an offering that may go as high as $10 billion, Zuckerberg said in his statement that this is the first time Facebook has ever acquired a company with so many followers, and do not expect to do it again anytime soon. Facebook plans to allow Instagram to run as an independent company rather than acquire the talent and make Instagram a Facebook exclusive app.

In his post about the acquisition, Zuckerberg said, ““¦We’re committed to building and growing Instagram independently. Millions of people around the world love the Instagram app and the brand associated with it, and our goal is to help spread this app and brand to even more people.”

Kevin Systrom co-founded Instagram with Mike Krieger and has famously kept the company behind the till-recently iOS exclusive app very small. In his own blog post detailing the acquisition, Systrom made it clear that Instagram wasn´t going away, and looks forward to working together with Zuckerberg and team.

Systrom said, “It´s important to be clear that Instagram is not going away. We´ll be working with Facebook to evolve Instagram and build the network. We´ll continue to add new features to the product and find new ways to create a better mobile photos experience.”

Systrom closed his blog by saying, “We´re psyched to be joining Facebook and are excited to build a better Instagram for everyone.”

Facebook plans to allow Instagram to continue to share photos to Facebook as well as other platforms, such as Twitter and Tumblr. Users can also opt out of sharing these photos with Facebook if they like.

Instagram made news last week as the popular photo sharing app was released on Google´s Android operating system. As an iOS exclusive mobile app, Instagram was able to build an online community of more than 30 million who used the app to apply vintage and weathered filters to their photographs, then share them with others.

In their time with iOS, the small company was able to top the iTunes Store charts as a “Most Downloaded” app. When the app released for Android last week, it was downloaded more than 1 million times within the first 24 hours of availability.

This acquisition comes as the first of its kind as Facebook prepares for its initial public offering. Their IPO places the companies value between $75-$100 billion. What makes Facebook so potentially valuable is its advertising. Last year, more than 85% of its revenue came from advertising, which makes up 28% of America´s online-display ad market. Facebook stands above Yahoo by a fair margin, as the former only makes up 11% of the online-display ad market.

Facebook is forced to go public as they have reached the limits of the 500 share holder rule. Private companies who have more than $10 million in assets are required to go public and share their financials with the SEO once they acquire 500 stockholders.

Should all go according to plan, Mark Zuckerberg stands to make a good bit of money from their IPO. Holding nearly 30% of Facebook shares, he could end up with a personal worth of $24 billion. Today´s acquisition could boost Facebook´s IPO, therefore making Zuckerberg even wealthier.


Source: Michael Harper for RedOrbit.com