How much was instagram bought for
Facebook Buys Instagram for $1 Billion
Keith Bedford/Bloomberg NewsKevin Systrom, chief executive of Instagram.
2:02 p.m. | Updated
Facebook is not waiting for its initial public offering to make its first big purchase.
In its largest acquisition to date, the social network has purchased Instagram, the popular photo-sharing application, for about $1 billion in cash and stock, the company said Monday.
It’s a notable move for Facebook, which has exclusively focused on bite-size acquisitions, worth less than $100 million.
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With Instagram, Facebook will get a formidable mobile player – an area that is seen as a weakness for the sprawling social network. Founded two years ago, the service — which lets users share photos and apply stylized filters – has become one of the most downloaded applications on the iPhone, with some 30 million users. Instagram released a version of its application for Google’s Android operating system last week.
On Monday, both companies expressed their commitment to run Instagram as an independent service.
Pool photo by Yuriko Nakao Mark Zuckerberg, the chief executive of Facebook, which is expected to go public next month.
In a post on his profile page, Facebook’s chief Mark Zuckerberg said Instagram would continue to work with rival social networks. That will allow users to post on other services, follow users outside of Facebook, and to opt out of sharing on Facebook.
“For years, we’ve focused on building the best experience for sharing photos with your friends and family,” Mr. Zuckerberg wrote. “Now, we’ll be able to work even more closely with the Instagram team to also offer the best experiences for sharing beautiful mobile photos with people based on your interests.
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In a separate blog post on Instagram’s Web site, the company’s chief executive, Kevin Systrom, also reiterated plans to preserve the service’s functionality and said he looked forward to leveraging the new parent company’s resources and talent.
The announcement comes as Facebook prepares for its highly anticipated initial public offering, widely expected to take place next month.
Though Facebook is known for smaller acquisitions, Instagram’s surging momentum likely compelled the social network to swiftly put together a billion-dollar offer. Last week, Instagram, which has just a handful of employees, closed a financing round worth more than $50 million with several prominent investors, including Sequoia Capital, an early backer of Google, Thrive Capital, the firm run by Joshua Kushner, and Greylock Capital, an early investor of LinkedIn.
AllThingsD first reported last week that Sequoia was in the process of leading a $50 million round in Instagram.
That latest funding round valued Instagram at about $500 million, according to one person with knowledge of the matter, who requested anonymity because discussions were private. Facebook’s purchase, one week later, means that investment has now doubled in value.
The deal is expected to close later this quarter, according to Facebook’s statement.
Here is the news release from Facebook:
“Facebook announced today that it has reached an agreement to acquire Instagram, a fun, popular photo-sharing app for mobile devices.
“The total consideration for San Francisco-based Instagram is approximately $1 billion in a combination of cash and shares of Facebook.
The transaction, which is subject to customary closing conditions, is expected to close later this quarter.”
Mark Zuckerberg, founder and chief executive of Facebook, posted about the transaction on his Facebook page:
“I’m excited to share the news that we’ve agreed to acquire Instagram and that their talented team will be joining Facebook.
“For years, we’ve focused on building the best experience for sharing photos with your friends and family. Now, we’ll be able to work even more closely with the Instagram team to also offer the best experiences for sharing beautiful mobile photos with people based on your interests.
“We believe these are different experiences that complement each other.
But in order to do this well, we need to be mindful about keeping and building on Instagram’s strengths and features rather than just trying to integrate everything into Facebook.
“That’s why 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.
“We think the fact that Instagram is connected to other services beyond Facebook is an important part of the experience. 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.
“These and many other features are important parts of the Instagram experience and we understand that. We will try to learn from Instagram’s experience to build similar features into our other products. At the same time, we will try to help Instagram continue to grow by using Facebook’s strong engineering team and infrastructure.
“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.
“We’re looking forward to working with the Instagram team and to all of the great new experiences we’re going to be able to build together.
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Top 5 Companies Owned by Facebook (Meta)
Meta Inc. (META), the company which owns Facebook, the world's largest social networking website, was founded by CEO Mark Zuckerberg and several Harvard College roommates in 2004. The company's name initially was FaceMash, which was changed to TheFacebook, eventually dropping "The" from its name to become Facebook, before being changed yet again to Meta in Oct. 2021. Zuckerberg and his co-founders initially launched the service for their Harvard classmates, quickly expanding it to other universities and then to the general public. The company since then has grown into a global giant with 2.8 billion users and a market cap of $926.8 billion. The company reported FY 2020 net income of $29.1 billion on $84.1 billion in revenue, nearly all of which came from advertising.
Meta has expanded far beyond its original social networking platform since its founding 16 years ago. Its products also include messenger services, photo and video sharing, augmented reality, and many other apps and services.
Acquisitions have been key to growing these businesses and Meta's revenue in general. Meta's strategy has been to buy potential rivals before they can get too big. In the process, the company sometimes has paid exceptionally high prices for some deals. The company has also drawn attention from the Federal Trade Commission (FTC) due to potential anticompetitive practices, with the FTC recently demanding data on unreported purchases from Meta as well as other big tech companies.
Below, we look in more detail at Meta's 5 biggest acquisitions. The company does not provide a breakdown of how much profit or revenue each acquisition currently contributes to Meta.
- Type of Business: Photo and video-sharing app
- Acquisition Cost: $1.0 billion
- Acquisition Date: April 9, 2012
Instagram is a photo and video-sharing social networking platform that was launched in 2010. Through the Instagram app, users can upload, edit, and tag photos and videos.
The company remained independent up until it was acquired by Meta for $1.0 billion in 2012. While Meta bought Instagram as the photo-sharing company was garnering significant attention from venture capital firms and other investors. Some estimates indicate that Instagram generates more advertising revenue than its parent company.
When it acquired Instagram, Meta opted to build and grow the Instagram app independently from Meta's main Facebook platform; Instagram remains a separate platform to this day. The price that Meta paid for Instagram, which at that time was generating no revenue, reflects Meta's willingness to pay a premium for young companies.
- Type of Business: Mobile messenger service
- Acquisition Cost: $19.0 billion
- Acquisition Date: February 19, 2014
WhatsApp is a messenger and calling service available to users throughout the world. The platform was launched in 2009 as a low-cost alternative to standard text messaging services.
Throughout much of its history, WhatsApp has allowed users to send messages and make calls directly to other users for no cost, regardless of location. Users can also send photos, videos, and documents over the platform. Meta bought WhatsApp at a time when the smaller company boasted more than 400 million active monthly users, making it a fast-growing potential rival to the Facebook network platform.
When Meta purchased WhatsApp, it was an independent company that had recently been valued at $1.5 billion. Although it is unclear exactly how much revenue WhatsApp generates, some estimates are that WhatsApp revenue will be as high as $5 billion by 2020.
Oculus VR
- Type of Business: Virtual reality technology company
- Acquisition Cost: $2.0 billion
- Acquisition Date: March 25, 2014
Just weeks after announcing its acquisition of WhatsApp, Meta followed up by buying virtual reality hardware and software company Oculus VR. This company was founded in 2012 and is best known for its Oculus Rift product, a virtual reality headset that was designed for video gaming.
Since Facebook's purchase of Oculus VR in 2014, the subsidiary has made multiple acquisitions of its own. Perhaps the most prominent was the 2015 purchase of Surreal Vision, a company specializing in 3D scene mapping reconstruction.
At the time that Meta acquired Oculus VR, the company had only produced a development prototype of what would become its popular headset product. Meta's purchase of Oculus VR gave it an instant presence in the virtual reality market at a time when developers were showing growing interest in VR.
Onavo
- Type of Business: Mobile web analytics
- Acquisition Cost: $100–200 million (estimated)
- Acquisition Date: October 2013
Founded in 2010, Israeli company Onavo performs web analytics on other mobile apps to determine customer usage. Meta acquired Onavo in October 2013 for an undisclosed amount that some analysts estimated to be between $100 million and $200 million. At the time of the acquisition, Onavo was an independent company.
Although Onavo is not one of Meta's largest acquisitions, Onavo's technology may have allowed Meta to make crucial early determinations about other companies and apps to acquire. Onavo has occasionally been classified as spyware, forcing Meta to pull Onavo from both the iOS and Android app stores in the face of criticism.
Beluga
- Type of Business: Messaging service
- Acquisition Cost: Undisclosed
- Acquisition Date: March 2, 2011
Messaging app service Beluga, founded in 2010, was acquired by Meta a year later. Meta bought Beluga in the midst of the startup's fundraising process for an undisclosed sum. In buying Beluga, Facebook acquired the technology that eventually became the social media company's highly successful Messenger platform. In the process, Meta again expanded its offerings and eliminated a potential rival.
Facebook Diversity & Inclusiveness Transparency
As part of our effort to improve the awareness of the importance of diversity in companies, we have highlighted the transparency of Meta's commitment to diversity, inclusiveness, and social responsibility.
The below chart illustrates how Meta reports the diversity of its management and workforce. This shows if Meta discloses data about the diversity of its board of directors, C-Suite, general management, and employees overall, across a variety of markers. We have indicated that transparency with a ✔.
| Meta Diversity & Inclusiveness Reporting | |||||
|---|---|---|---|---|---|
| Race | Gender | Ability | Veteran Status | Sexual Orientation | |
| Board of Directors | |||||
| C-Suite | |||||
| General Management | ✔ (U.S. Only) | ✔ | |||
| Employees | ✔ (U.S. Only) | ✔ | |||
How Facebook bought Instagram and what it led to • Excerpts from books on the website of the publishing house BOMBOR
- Book excerpts
- May 8, 2021
Why did Zuckerberg decide to buy a popular startup for $1 billion and did Instagram employees get rich from this deal.
More interesting things below
In 2005, Kevin Systrom left Silicon Valley to travel to Florence. There he planned to study photography, so he bought the best camera he could find before the trip. nine0010
But the Florentine teacher chose her on the very first day of class. He handed the student a primitive plastic camera that took square blurry pictures. “You must learn to love imperfection,” he told Systrom. The idea for Instagram was largely born that summer. A few years later, Systrom will become the author of one of the most popular and expensive applications on the planet.
Why Instagram resisted “growth at all costs”, how Facebook managed to buy an independent app, why Instagram lured stars and why the founders of the app were forced to leave, journalist Sarah Fryer tells in the book “No Filter. Instagram Story. We share an excerpt from the book about that very fateful deal. nine0010
Facebook decides to buy
When Facebook founder Mark Zuckerberg heard that Instagram was raising funds for a $500 million valuation, he realized that this tiny, noisy competitor pumped up with new money could quickly become an even bigger threat.
The only solution was to buy it.
Zuckerberg thought he knew how to talk to Systrom, like founder to founder. Systrom did not want to lead the Facebook product. He aimed to keep the company alive and continue to shape the future of Instagram without the risks that come with being independent. nine0010
Facebook networks have already helped Instagram grow - and if Instagram became part of Facebook, they would have incredible resources to grow faster. This argument seemed to please Systrom. But serious negotiations were required.
Meeting of the two founders
On Thursday night at Zuckerberg's new home in Palo Alto's leafy Crescent Park neighborhood, Systrom began by asking for $2 billion. Zuckerberg tried to reduce this figure and later decided to include other participants in the process. He invited Facebook COO Sheryl Sandberg and CFO David Ebersman to a serious talk. They said they trusted his instincts, but first they would need to warn the director of transactions, Amin Zufonun, who could arrange everything.
nine0010
There was a disagreement about the ratio of money and shares in the transaction. Cash seemed like a safer option compared to risky potential future gains.
Zuckerberg tried to convince Systrom that the price of the deal in the future would be much higher. If Facebook stays the same, 1% of the company will only be worth $1 billion. But Facebook planned to grow, thereby bringing the value of the offered shares closer to Systrom's original figure and even exceeding it. nine0010
The Zuckerberg Hunter and the Surprise Bite
While the deal participants were talking, Bist, Mark's big dog, wandered around looking people in the eye or rolling onto his back as if he wanted to be part of the deal.
— Are you guys hungry? Zuckerberg asked. It was already three in the afternoon, and they only drank beer. — I'll fire up the barbecue.
Mark pulled out of the freezer a large piece of either venison or wild boar—something with lots of bones. “I don’t know what kind of meat it is, but I think I once hunted it,” he said.
Last year, Zuckerberg's goal was to only eat meat from animals that he killed himself. nine0010
Zufonun stood next to Zuckerberg while he worked on the meat. Smoke was coming out of the grill. Suddenly, the shepherd looked at the guest and growled. Then Bist threw himself on Amin's leg. "Heck!" exclaimed the director of transactions.
- Did he hurt you? Zuckerberg inquired. If yes, then we will have to report it. And they can take it.
Fortunately, Bist did no harm and Zufonun did not bleed to death, but later in meetings he jokingly told the story as if on the eve of the historic event, Zuckerberg was more concerned about the dog than the person in charge of the deals. nine0010
The place of the new app in the company
Usually, when Facebook acquired a company, they found ways to absorb the technology, rebrand and fill in the gaps with their own developments. If Instagram was going to be a standalone product of Facebook, then it was breaking the normal acquisition process, and it wasn't clear how things would work.
How can we integrate something like this? asked Facebook head of engineering Michael Schroepfer.
— Shrep, we're buying magic. We pay for magic. We don't pay a billion dollars for thirteen people. The worst thing we can do is force Facebook on them prematurely. nine0010
Zuckerberg sent an email to the Facebook council informing them of what was happening. It was then that they first heard about a major and almost completed deal. Since Zuckerberg had a majority vote in the company, the role of the board of directors was only to put stamps on his decisions.
The fate of the Instagram team
After closing the deal, the Instagram team decided to take a breath and went to Vegas. Upon their return from the weekend, the first news they received was that Facebook would not be able to help them with resources or infrastructure until the deal was actually approved by regulators. According to Facebook's lawyers, this could take many months. nine0010
The US and European governments have been investigating whether buying Instagram would give Facebook monopoly power.
Until then, Instagram can't be at Facebook's headquarters and can't begin active recruitment, so they'll have to work just as hard.
The second news was personal. Most of the employees didn't get rich. A couple of weeks after the deal, a Facebook representative came to the Instagram office in South Park to offer everyone new contracts with the founders of the application, Systrom and Krieger: new salaries, new stock options and cash bonuses if they stay at Facebook for more than a year. One by one, people entered the conference room, and some came out with gray faces. nine0010
Only three employees have been on Instagram long enough to be able to buy their quarter of Instagram shares and convert them into Facebook shares at a lower price. Everyone else didn’t extract any wealth from Instagram shares.
How much the founders of
earned Systrom and Krieger, on the contrary, received life-changing sums. Krieger owned 10% and Systrom 40%, so at the original deal price they made a net profit of $100 million and $400 million, respectively.
nine0010
Both began to explore how to spend the new fortune, and did so in a way that the tight-knit team noticed. Krieger planned charitable work, studied how and where to donate money, and was also interested in collecting contemporary art.
Systrom started looking for a house and invested in Blue Bott le Coff ee. Sometimes Systrom's purchases in online stores were delivered to the office. Employees noticed his new car, new Rolex watch, and new skis. Money finally gave him the opportunity to have what he wanted, in the best possible way - for him, the Instagram feed now seems to have become a reality. nine0010
For more facts and insider information about the mechanics of Instagram and its impact on our lives, read Sarah Fryer's book No Filter. Instagram Story.
Tell everyone what an interesting article you found!
No Filter. Instagram story Sarah Fryer
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Why Facebook bought Instagram: "Zuckerberg was just scared"
- Technologies
- Mikhail Levin Author
World experts on Facebook's largest acquisition in history: why the social network decided to spend $1 billion to acquire a mobile photo app
Facebook bought the popular Instagram mobile photo app for a fantastic $1 billion.
Now founded a year and a half ago Instagram has about 30 million users , but the app is free and does not currently have a proven business model. Why this social network deal? What fate awaits the service itself? Here's what famous Internet entrepreneurs and experts think about it.
“Facebook was scared of Instagram,” said MySpace founder Tom Andersen. Facebook is not going to learn anything from Instagram. Zuckerberg went for the deal as Instagram's skyrocketing user base made him worry. Even if Instagram was only a nascent threat, it is still a threat. If your company is worth $100 billion, and neutralizing a potential competitor would only cost a billion, why not take that step? nine0010
David Kirkpatrick, author of The Facebook Effect, the social network's unofficial annals, thinks buying Instagram is extremely logical, as photo sharing is one of the most important parts of Facebook's DNA.
“The takeover of Instagram is a logical step for Facebook for a number of reasons, and above all because photos are one of the key types of content for the social network. Every day, Facebook users upload 250 million photos, for many of them this is the main form of activity on the site. Zuckerberg could not allow any other service to become the main platform for sharing pictures, ”Kirkpatrick emphasizes. nine0010
“Every time you see such a fast-growing social platform, it's a good reason to get a little nervous. Of course, it would have made more sense for Facebook to acquire Twitter when it was at a similar stage of development. However, if you believe that Instagram could be the next Twitter, the purchase is the right move,” said Paul Buckheit, partner at the Y Combinator incubator and founder of FriendsFeed, bought by Facebook a couple of years ago.
Some saw in the deal Facebook's fear of the possibility of Instagram being taken over by competitors.
“The application would be of great value not only to Facebook, but, say, to Twitter. I'm also sure that Google was quite interested in buying. So to some extent, Zuckerberg is not only attacking, but also defending: Instagram is a very valuable asset for anyone who would like to compete with Facebook,” says Lou Kerner, founder of the Social Internet Fund. nine0010
MG Siegler, popular tech blogger and VC funder CrunchFund, is optimistic: “People look at a deal and think, 'what the f*ck?' I think Facebook is brilliant. This is one of the few big companies where they understand how and when to buy. You don't buy at the peak, you buy on the way to it." He predicts that with the release of Instagram on the Android mobile operating system (until last week, the service was available exclusively for iPhone owners), the number of users of the application in the very near future will reach 50 million people. nine0010
After the announcement of the deal from Instagram, a protest exodus of some users began, fearing for the future of the service.
For example, the message “RIP Instagram” (“Rest in Peace Instagram”) was hugely popular on Twitter. In Zuckerberg's original post about buying Instagram, the Facebook founder promises to keep the brand, independence and impartiality of the service. “Instagram users' ability to share photos with friends from a wide variety of social networks is an essential part of it. We plan to keep this feature, as well as the option not to share photos with other services at all. The user's social graphs on Instagram and Facebook will also not depend on each other," writes Zuckerberg. nine0010
Tom Andersen is sure that the founder of Facebook is not disingenuous: “Facebook mostly revolves around friends and therefore is terribly afraid of services like Twitter or Instagram, which profess a more open and public model and where the messages of any user are available to everyone else. Therefore, Zuckerberg wants to own the main “private” social network (Facebook) and the main “public” one (now it is Twitter, but you can’t buy it, so the only way out is Instagram).
In his opinion, in the near future Instagram may cease to be exclusively a mobile application and settle on personal computers. nine0010
The Russian Internet, due to the difference in time zones, has not really had time to respond to the news yet. “I had just fallen asleep, when suddenly two messages with the same text came - from News360 and from The new york times: they write that Facebook bought Instagram for a billion dollars. [...] What kind of comments can there be? I'm in the a**. I turn off my phone and go to sleep. Tomorrow will be a new day. Perhaps in the morning it will turn out that it was a belated April Fool's joke, ”SUP media director Anton Nosik wrote in his LiveJournal. However, Spout has not yet disclosed the reasons for his skepticism. nine0010
“The trend is simple: we used to say that text content is shrinking. It all started with long Livejournal posts, ended with 140 characters on Twitter [.
