Facebook is buying Face.com, the company that now provides facial-recognition technology used by the world's largest social network to help users identify and tag photos.
The deal bolsters one of Facebook's most popular features - the sharing and handling of photos - but the use of the startup's technology has spurred concerns about user privacy.
Media reports in past weeks have pegged the size of the transaction at between US$80 million to US$100 million (NZ$100 million - $NZ126 million), but two people familiar with the terms of the deal said the actual price was below the low-end of that range.
Neither Facebook nor Face.com disclosed terms of the deal, which is expected to close in coming weeks.
Facebook, which will acquire the technology and the employees of the 11-person Israeli company, said in a prepared statement that the deal allows the company to bring a "long-time technology vendor in house."
Face.com, which has raised nearly US$5 million from investors including Russian Web search site Yandex, launched its first product in 2009. The company makes standalone applications that consumers can use to help them identify photos of themselves and of their friends on Facebook, as well as providing the technology that Facebook has integrated into its service.
Faceboook uses the technology to scan a user's newly uploaded photos, compares faces in the snapshots with previous pictures, then tries to match faces and suggest name tags. When a match is found, Facebook alerts the person uploading the photos and invites them to "tag," or identify, the person in the photo.
Responding to inquiries from US and European privacy advocates, Facebook last year made it easier for users to opt out of its controversial facial-recognition technology for photographs posted on the website, an effort to address concerns that it had violated consumers' privacy.
The deal is the latest in a string of acquisitions by Facebook in recent months, including the US$1 billion acquisition of mobile photo-sharing service Instagram. US antitrust regulators are currently undertaking an extended review of the Instagram deal, which Facebook expects to close by the end of the year.