What’s the story with Facebook buying Instagram?

Last night Facebook splashed out $1 billion dollars to buy the photo app Instagram. Is this the world’s most expensive download or a smart bit of business?

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So Facebook just bought another company eh? Big deal.

Well it is a big deal actually, as the purchase of photo sharing app Instagram for $1billion is easily the largest acquisition that Mark Zuckerberg has made to date, with many thinking he paid a little over the odds.

Yeah, what is Instagram anyway. I’m asking for a friend, ahem…

Of course you are. Instagram is a photo app for iPhone that was also recently launched on Android. Its main feature is that it takes your ordinary snap and then, depending on what filter you want to apply to it, makes it look cool and retro. Honestly, even a crappy picture of your dog chasing a ball around a park looks great once the Instagram magic gets at it.

Not only that but Instagram also allows users to share their photos with each other and 'Like' them and this has become a big feature of its success and the probable reason for Facebook diving in.

Why so?

Well, photo sharing on Facebook, especially on mobile, is a bit crap. With other photo sharing networks like Pinterest growng rapidly, the purchase of Instaram instantly gives Facebook access to the nearly 30 million users signed up to the app as well as all the sharing functionality of the app.

So tell me about the people who set up Instagram and became mega-rich yesterday?

Kevin Systrom and Mike Krieger set up Instagram in October 2010 and despite having no revenue stream and only 12 employees, they are now splitting a $1 billion between them.

A happy Monday for them anyway. So what happens now? Instagram disappears and gets rebranded as a Facebook app?

No, for the first time ever Facebook have promised to keep Instagram independent and not mess with it in any way.

Announcing the deal Zukerberg was keen to point out Instagram’s independence, saying:  “We plan on keeping features like the ability to post to other social networks, the ability to not share your Instagrams on Facebook if you want, and the ability to have followers and follow people separately from your friends on Facebook.”

Sounds fair, so I shouldn’t be getting freaked out about Zuckerberg taking over the world?

Well you can still do that but this is not related we think. With Facebook expected to float on the stock exchange next month, there will be buckets of money floating around their accounts. Buying Instagram wasn’t cheap, or maybe even that smart, but it was a decent bet and even if it all goes horribly wrong, Facebook can afford it.

Right, I’m off to take 1970’s style pictures of a flower, want to see?

Nah, I’m sure I’ll see them later on Facebook anyway.