If Instagram was worth more than a billion to Google, yesterday's headlines would've been different.

Perhaps Instagram should've been worth more than a billion to Google, but that's another discussion.

Don't be too sure. I'm sure there's some innovative funeral home that would be able to utilize Instagram to offer a way for mourners to document the mourning process and find closure, a way that would be worth much more than $100. Maybe not $1 billion, but more than $100 for sure. ;)

that's a start-up right there. :)

Instadrama.

It's worth that only because Google can easily pay it.

Google's net income was $9 billion in 2011(http://en.wikipedia.org/wiki/Google). According to Facebook's S-1 filing in February 2012, Facebook's net income for 2011 was... $1 billion(http://www.sec.gov/Archives/edgar/data/1326801/0001193125120...).

The real question still remains: Why is Instagram worth that much to Facebook?

Because of the huge user base! (Of course, 95% of instagram users are already on facebook, but imagine if instagram uploaded your photos by default to G+)

FB got Instagram before it could be worth more than $1B to Google.