Facebook bought an Instagram application for $ 1 billion on the eve of the IPO

The largest social network in the world Facebook has agreed to buy Instagram - a free application for smartphones that allows you to exchange photos. The amount of the transaction will be approximately $ 1 billion, and the payment will be made in cash and shares of the company, which in the near future plans to reach the exchange, BBC television and radio corporation reports.

The Instagram application was launched in October 2010 and until recently was supported only by Apple devices, but last week the first version for the Android operating system appeared.

Instagram has quickly become one of the most popular applications in the market: at the moment, about 30 million users are registered in this network, which are loading about 5 million pictures daily.

The program allows not only to upload and exchange photos with other users, but also makes it possible to process each photo.

Using 17 different light filters, the user can change and adjust the resulting picture to his taste.

“We believe that the possibility of using Instagram on various Internet services and resources in addition to Facebook will become an important part of our cooperation,” the network of the network Mark Zuckerberg said on his Facebook page.

The entrepreneur also noted that he does not intend to break the connections of this application with other services.

“We intend to preserve functions such as the ability to upload photos on other social networks and a blog platforms,” says Tsukerberg's statement. “In addition, we will not force users to publish photos from Instagram on Facebook, and your“ followers ”will not be automatically added to your friends on social networks.”

Finally, the American billionaire admitted that this is the first purchase of his company with such a large number of users, and added that the company does not plan to carry out such transactions regularly, "if they are at all."

It is also expected that all the employees of the service will go to Facebook offices at the end of the transaction. True, only 13 people work on Instagram, BBC said Paul Kedriski, the author of the Infectious Greed blog and an investor in high -tech companies.

In February of this year, Facebook management has published plans to attract investment in the amount of $ 5 billion through the placement of shares in the open stock market. According to some estimates, the cost of the company after entering the exchange can reach $ 100 billion.

Experts: So Facebook is trying to compete with Google and Apple

Expert from Altimeter Group Rebecca Lib notes that the purchase has become part of the Facebook strategy to improve mobile products to compete with Google and Apple. "We do not yet know how Facebook will monetize mobile platforms. But the first step should be Facebook optimization for mobile devices," she says.

The social network, which at the beginning of February, applied for an IPO, has not yet monetized the popularity of its mobile services, which are used by more than 425 million people. However, on the eve of the initial public placement of shares on the company exchange, it is necessary to demonstrate the variety of sources of their income to investors, RIA Novosti reports.

“After the IPO Facebook, the predator will take a position. They need to make sure that no one will get in their way and buy everyone who comes in the way,” said Michael Patcher, an analyst from Weedbush Securities .

Jan Rezab, general director of Socialbakers, collecting Facebook and Twitter statistics, also previously stated in an interview with RIA Novosti that one of the factors in the success and maintenance of Facebook leadership could be a more aggressive strategy for absorption of companies and acquire new technologies.

“Look with whom Facebook is competing with - Google, Apple, Microsoft and the like. For this, you need to have a strong brand and a strong user platform,” said Gartner Analyst Brian Blau. The purchase of companies that can improve the design of the site, strengthen the security of the service and assist in the development of new products, Facebook activated last year.

At the same time, if Facebook continues to buy every popular social resource, such a strategy can be extremely costly over time, Bakheit believes.

Experts surveyed by Reuters believe that Facebook paid an “extraordinary” amount for Instagram, estimating the cost of the brand and the loyalty of the service users. The bloggers from The Next Web calculated that Facebook bought an application that spreads free of charge and has no revenue sources, at the rate of $ 33 for each user.