Friday, May 11, 2012

Facebook, Instagram Not A Done Deal Yet As FTC Launches Probe

Facebook made major headlines with its $1 billion acquisition of photo-sharing app Instagram. However that deal is hardly closed as it has been reportedly delayed until the Federal Trade Commission can give it the once-over.

According to reports by several news sources, the FTC is examining the deal on competition grounds, a move that could push the close of the deal into the third quarter or even perhaps block the deal if there is enough evidence to warrant such a move. The FTC has asked rivals Google and Twitter for their input on the deal, though it was not revealed what information it was seeking.

According to the Financial Times, who originally broke the news, at the heart of the FTC is investigation is the potential for any anti-competitive practices. The question would seemingly be would Facebook's Instagram acquisition give the company an undo leverage in a particular market. The information the FTC is seeking can be about the markets — here, social networks, photo sharing, and mobile — what the companies do, what their operations are, and whether they are competitors in certain markets and how their merger could impact competition.

While this might make for good headlines these are fairly routing practices for any acquisition over $68.2 million. Despite that fact it could potentially hurt Facebook for the time being. The social network cannot use Instagram until the investigation is closed and with the IPO reportedly on its way investor might see this as a major setback.

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