Facebook, the world's biggest social network, announced that it will be buying the photo sharing app, Instagram, for $1 billion in cash and stock.
Instagram, primarily an Apple app, has over 30 million users and was adding 1 million users within 12 hours after it was made available on Android devices. The purchase would be Facebook's largest and priciest ever for an application.
Mark Zuckerberg, Facebook CEO, announced that the Instagram brand will be separate from Facebook.
"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," he said in a statement. "That's why we're committed to building and growing Instagram independently."
The social network site's pricey acquisition came weeks after another highly popular app was bought by mobile game developer, Zynga.
Zynga purchased the "Draw Something" app for $200 million in late March after it broke records with 50 million downloads in 50 days and topping the charts for both free and paid grossing lists in Apple's iTunes Store.
Though Facebook's current purchase dwarfs the Zynga deal, both companies have further demonstrated the competitiveness of the social network market. Both deals happened relatively quickly with a hefty dollar amount attached to each acquisition.
Paul Kedrosky, a tech investor and blogger, commented on the Facebook's transaction.
"I'm told it also came together very quickly, like a lighting strike," said Kedrosky in an interview with BBC. "After launching on Android last week and adding one million users a day, it became obvious that this wasn't just a photo sharing app - it was a competitive social network, and the concern may have been that there would be rival bids."
"That's the only reason to think Facebook would have done this in the quiet period ahead of its flotation," added Kedrosky.
Instagram was valued to be $500 million, reported AllThingsD, with a high quantity of followers, but have not yet discovered a revenue stream. Facebook will look to change that but still look to appease the existing fan base.
"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," wrote Zuckerberg in a Facebook post. "We don't plan on doing many more of these, if any at all."
Not everyone is thrilled about Instagram's new owners. Loyal users are questioning if the photo app will still maintain the creativity and innovation that made it so successful under Facebook's watch.
Zynga also received is fair amount of criticism after its hasty purchase of Draw Something. Critics have called Zynga's acquisition of OMGPOP, creators of Draw Something, hasty and were skeptic about the company's future returns. Zynga silenced its critics last week after reclaiming the top spot in Apple's iTunes Store.
Facebook, which claims to have 845 million users, will look to satisfy fans and generate revenue through Instagram, which was named Apple's 2011 best app among a thousand other competitors.
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