Instagram co-founder Mike Krieger will earn around $100m.
11 April 2012 | Category: Online
The social networking website has purchased photo-sharing service Instagram for a reported $1 billion dollars.
Instagram allows Smartphone and tablet users to add effects, tints and filters to their photographs before they post them on social networking websites.
It is believed that negotiations started when Facebook founder Mark Zuckerberg asked Instagram co-founder Kevin Systrom for a meeting at his house in Palo Alto. Negotiations were completed just three days later, with Zuckerberg sounding out the agreement himself.
Mark Zuckerberg said after the agreement: "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".
The deal comes with a fair level of risk for Facebook as Instagram has generated no profit in its two years of existence. However, Instagram neatly complements Facebook's service. Zuckerburg has promised to improve the service and also continue to make it available for other rival social networks such Twitter.
Update: It has since been discovered that Twitter had tried to buy Instagram two months before the Facebook deal was struck. It is likely that Zuckerberg would have known that they may lose the company to a rival and that it Twitter’s interest would have pushed the asking price up to $1 billion.