In a jaw-dropping deal that just took place, social network empire Facebook has bought photo-sharing hipster site Instagram for $1 billion in a combination of cash and Facebook shares.

Instagram as grown to be one of the largest mobile-photo sharing sites on the internet with 27 million users, almost exclusively due to the iPhone. Within the last week, the site finally launched their much anticipated Android client and it quickly shot up to the #1 free app under Social on the platform, showing just how popular it is amongst users. (In a funny blow-back, the über hipsters on iOS are evidently upset their retro-photo garden of Eden is being disrupted by the unruly 'Droid users, with some giving up the service. Yeah.)

However, one thorn in the side of Windows Phone is the fact that the Instagram service is unavailable to our audience. What's more, they evidently won't allow third-party access either, leaving us out in the dark. This deal, however frightening in size, is good news for Microsoft who own a 1.6% share of Facebook with a large investment made back in 2007 (when the young social network really needed the money and support). Even more recently, Bing search now shows up on the log-out page for the site and Bing Translator handles language translation within the network itself.

As a result, we can probably expect not only an Instagram client (assuming one is already not in the works) but a strategic alliance between Facebook and the photo-sharing network, perhaps giving Windows Phone a slight edge in the future. It will be interesting to see what happens, especially since Facebook and Google don't get a long very well.

Source: CNN Money; Additional info via GeekWire, CNN Money and ZDNet