TAKING PAGE FROM GOOGLE'S BOOK

The Instagram deal is expected to resemble Google Inc's $1.65 billion acquisition of video service YouTube in 2006. YouTube retains its own offices in San Bruno, California, and largely operates independently of Google.

The acquisition came as Instagram was in the process of meeting with venture capital firms about raising more funding, according to one source familiar with the matter.

"It was not long-planned," the source said on condition of anonymity, referring to the Facebook acquisition. "What happened is that Facebook must have come in with a number."

In addition to bolstering Facebook's photo-sharing and mobile capabilities, one side benefit of the deal for Facebook, the source noted, is that it prevents rival Twitter from acquiring the popular app.

With its purchase, Facebook said it would continue to develop Instagram as an independent app that remains compatible with other social networking services.

"We plan on keeping features like the ability to post to other social networks, the ability to not share your Instagrams on Facebook if you want, and the ability to have followers and follow people separately from your friends on Facebook," Zuckerberg wrote.