Moving Pictures: Facebook's US$1bn Instagram Buy

Facebook has agreed to buy Instagram and its proprietary photo sharing/modification software in a cash and stock deal worth approximately US$1bn. Facebook's CEO, Mark Zuckerberg, noted that Instagram would be highly complementary to Facebook's core social networking platform and help extend it into new social media platforms and connected devices. BMI believes the deal gives Facebook more opportunities to leverage user information, particularly advertising. And, with an initial public offering (IPO) looming, the deal will certainly help it appear even more alluring to would-be investors. However, at US$1bn, it will be a long time before Facebook sees a return on its investment.

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