From what I've heard (don't quote me on this), I think Instagram was having serious financial difficulties at the time of the acquisition. The costs to run the

From what I've heard (don't quote me on this), I think Instagram was having serious financial difficulties at the time of the acquisition. The costs to run the service (media transfer and storage are a massive infrastructure cost) were astronomical. The Facebook buyout was almost the only way they'd stay alive without giving up a massive piece of the company in a funding round.