Facebook is going to pay $1 billion in cash and stock to the 2 year old photo sharing app’s developer in what is said to be the largest acquisition of the social media website month’s prior going public.
By acquiring Instagram, Facebook has prevented other companies from purchasing this solid app. Companies like Twitter and Google Inc. is also rumored to be courting the app developer before he decided to stick with Facebook.
According to Paul Becheit, “Anytime you see a social platform that’s growing that quickly, that’s got to be cause to be nervous. It would be better to have bought Twitter at this stage. So if you’re thinking this could be the next Twitter, it could be a smart thing to do,” he said of Facebook.
The social networking site has traditionally purchased small companies as a means of hiring individuals. They usually discontinue the acquired company’s products or they build a similar one and integrate it to their service.
Gartner analyst Ray Valdes said of the acquisition, “Facebook is acquiring a similar company in that it’s fast growing, doesn’t have revenue or a business model, but has become part of the online culture.”
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