Report: Despite Systrom’s denial, Twitter made $525M offer for Instagram

The New York times reported Sunday details related to the acquisition of Instagram by Facebook (s fb) that could spell legal concerns for both Instagram and Facebook. The Times reports that even though Instagram co-founder Kevin Systrom testified in August that the company “never received any offers,” before the Facebook sale, there were verbal agreements between Twitter and Instagram executives for an acquisition of $525 million in cash and Twitter shares.

The story notes that Systrom’s testimony carries perjury risks or fraud risks if Instagram did indeed recieve offers from Twitter before the sale to Facebook, since if Twitter did notĀ receiveĀ a chance to provide a counter-offer, Instagram investors could have lost an opportunity to make more money off the acquisition.

When asked for a response to the Times story, Facebook declined to comment. Twitter has not yet responded for comment.

Any potential legal issues might rest on the notion of whether Twitter’s offer was ever really considered a “formal offer,” which Systrom explicitly denied took place. However, shareholder lawsuits have been filed over less.

Facebook initially announced that it was acquiring Instagram for about $1 billion in April, but by the time the deal closed in September, it was worth closer to $735 million since the value of Facebook had dropped since the company’s IPO in May.

Instagram and Twitter have recently been sparring over photos on the two services, seen as a key component for keeping user attention. First Twitter removed the ability for Instagram users to find their friends through Twitter’s social graph. Then Instagram rolled out profiles for the web, and then removed capabilities for Twitter cards, meaning Instagram photos will no longer show up within Twitter streams. Twitter followed up by rolling out its own version of photo filters the following week.