On February 1, at the peak of the frenzy over Facebook’s announcement that it would go public, Path announced a photo effect called Depth. It was a brash display of public relations. Not only was Path upstaging Facebook’s mobile offerings, its new feature meant that it now had Instagram’s exact feature set as well. Today, Facebook’s purchase of Instagram means those features are worth a billion dollars. What does that make Path, the mobile timeline app Facebook wished it had, worth?

Path is still an independent company, and unlike Instagram, it makes a little pocket change by selling photo filters. It has similar social dynamics to those that make Instagram great, and it arguably has a better interface. It does more than just photos, too. It allows videos, text statuses, place check-ins and songs.

A key difference is that the only option for Path is closed sharing with friends only. Both Instagram and Facebook can be configured this way, but Path is for close connections only. The way around it is to share via Twitter, Tumblr or, indeed, Facebook.

Path’s version 2 do-over plays a similar role to Gowalla, another app Facebook bought (and promptly shut down). With Timeline out the door, Gowalla’s team in the office and Instagram under its banner, Facebook and Path are now staring each other down, feature for feature.

So Facebook determined that Instagram’s features were worth a billion dollars. What does that make Path worth?

Ask a Better Question

In all the talk about bubbles in tech valuations, there’s a prepositional phrase that’s almost always missing. The question isn’t as simple as “What is Instagram worth?” or “What is Path worth?” It’s “What is this company worth to whom?

The idea of paying $1 billion for a company with no revenue seems obscene. But, to Facebook, it’s 1% of the company’s new valuation. The deal brings in a beloved product that integrates beautifully with Facebook’s existing offering.

But Instagram played hard to get. Facebook couldn’t cut a deal last year, and it tried to build its own competing photo filters for a while. Instagram continued to grow like a weed on its own, and it shipped its anticipated Android version just last week. It took a billion dollars to convince the team to join Facebook.

As Sam Odio, Facebook’s former product manager for Photos, told ReadWriteWeb today, “The 1BN acquisition price is almost certainly the result of a bidding war.” His “guess is that Facebook bought this to keep it out of Google’s hands.” Whether it was Google, Apple, Amazon, Microsoft or someone else, acquisition was the only way out for Instagram. Facebook wanted it the most.

Path remains independent, and it may stand to gain from a David-and-Goliath moment with Facebook. But the pressure on the price of Instagram means that Facebook’s competitors wanted a piece. Path looks like that piece, but it remains independent. With Facebook offering all of its features, stronger network effects and a more extensible platform, let’s see how long that lasts.

But as for the price, that depends how much the buyer wants to bet against Facebook.