Facebook is bringing one of its long-term vendors, a facial-recognition technology company Face.com, in-house.
The Israeli company's technology helps people tag photos on the Web by figuring out who is in the pictures.
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 $80 million to $100 million, but two people familiar with the terms of the deal said the actual price was below the low-end of that range.
Other sources suggest the deal is closer to $60m.
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.'
A Facebook spokesman said: 'People who use Facebook enjoy sharing photos and memories with their friends.
'Face.com’s technology has helped to provide the best photo experience. This transaction simply brings a world-class team and a long-time technology vendor in house.'
Face.com founder Gil Hirsch said on his company's blog: 'Our mission is and has always been to find new and exciting ways to make face recognition a fun, engaging part of people’s lives, and incorporate remarkable technology into everyday consumer products.
'We love building products, and like our friends at Facebook, we think that mobile is a critical part of people’s lives as they both create and consume content, and share content with their social graph.'
Face.com, which has raised nearly $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 U.S. 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 $1 billion acquisition of mobile photo-sharing service Instagram.
U.S. antitrust regulators are currently undertaking an extended review of the Instagram deal, which Facebook expects to close by the end of the year.
Shares of Facebook, which continue to trade below the price at which they were offered during the initial public offering in May, were up 5.5 percent at $31.66 in midday trading on Monday.
