It was announced late last night that Facebook is to buy the photo-sharing app Instagram for $1 billion (£630 million). I first read the news very late last night on Facebook via a post from Mark Zuckerberg that was reshared by Robert Scoble. The message starts with “I’m excited to share the news that we’ve agreed to acquire Instagram and that their talented team will be joining Facebook.”

Facebook are saying publicly that the acquisuition has been made to enhance the service that it offers to its users. Although Facebook allows you to upload mobile photos to the site they currently do not allow you to do much else with them and so Instagram would allow some extra functionality to their core offering.

For those of you that do not know about Instagram it is a free photo sharing app that allows you to apply a variety of retro looking filters to your photos.  You will almost certainly have seen examples on a variety of social networks.

Instagram was originally launched 18 months ago on Apple’s iOS platform and quickly gained a lot of traction. It currently has in the region of 30 million users on iOS and last week it launched an Android, with a million downloads in the first day. Instagram has proven itself to be among  the most popular  photo sharing apps. Instagram have confirmed the acquisition but have also announced that users will still be able to share photo’s on other social networks such as Twitter.

The move by Facebook to buy Instagram may in reality be two fold. As well as being able to integrate Instagram’s functionality more deeply into Facebook would be very beneficial but it can also be seen as a defensive move by the social networking behemoth. By buying Instagram Facebook has prevented its purchase by a rival and thus prevented the deeper integration of Instagram into another social network.

Instagram has 13 employees, they’re obviously not supersticious, and so all of them are likely to do very well out of purchase. The $1 billion price tag that is currently floating about is made up of cash and shares. The deal is expected to be completed during Q2 of this year.

Facebook buying Instagram is interesting because they have never bought a company with such a large user base before, a fact that they are quick to acknowledge and indeed they have gone so far as to say they are unlikely to ever do so again.

What do you think about Facebook buying Instagram will be good or bad for Instagram and have Facebook just further cemented their position as the worlds number one social network?