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I've got two guesses:

First, it integrates an incredibly popular mobile destination into the Facebook ecosystem.

A lot of people have been using Instagram as a replacement for their built-in smartphone camera software. You don't even need to go on Facebook to post those photos, thanks to the Instagram Facebook app.

That's ad revenue and location data that Facebook would love to have more direct access to.

Second, Facebook hasn't really been focused on mobile until recently. Mobile features have been second to web features for a long time now.

I think that Facebook has woken up to how far behind they are in the mobile space, and wants to catch up quickly. Photos are probably the most important sector of the mobile space, especially now that phone cameras are generally as good as mid-market point-and-shoot cameras.

Hence acquihiring Mike Matas (Push Pop Press), and now Instagram.



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