Is the Facebook-Instagram Deal in Trouble? (FB)May 30, 2012 2:07 pm ·
A Tuesday Reuters report reveals that Facebook’s plan to buy Instagram for $1 billion may not be as easygoing as the company had originally hoped. In light of a disappointing performance since its Wall Street debut (not to mention new allegations of foul play), the social network reportedly received notice from the Federal Trade Commission earlier this month. Known as a “second request,” the FTC notice basically means that acquisition will be subject to a rather extensive investigation by anti-trust regulators.
“The purchase of the photo-sharing service on the Internet is a crucial part of Facebook’s strategy to bolster its mobile offerings at a time when consumers are increasingly accessing the Internet through smartphones,” the report observes. However, with the recent unveil of its own Facebook Camera app, it’s unclear how Instagram—which Facebook maintains will be promoted separately—really fits into this strategy.
Although both Facebook and the FTC refused to answer questions, a Reuters source was able to confirm that the “second notice” was dated May 16—two days before the social network’s public debut.
Furthermore, despite being a standard FTC practice to give such a review to all acquisitions worth more than $68.2 million, the fact that this decision comes after the agency questioned Facebook’s Silicon Valley competitors seems a bit odd to say the least.
“Google and Twitter are among companies that have also been asked about the [Instagram] deal,” Reuters continues, citing another source. According to the report, these inquiries were taking place as early as May 10. “The agency was asking…what concerns tech companies might have about the Facebook purchase of Instagram.”
Given the competitive interests of FTC interviewees like Google and Twitter, the exorbitant price Facebook is looking to pay for the popular photo app, and the lingering concern that Facebook ultimately plans to shutter Instagram once the deal closes, there is no shortage of potential reasons for the increased scrutiny the social site it getting.
However, after Google got the regulatory green light to close the Motorola Mobility deal last week—amidst anti-trust concerns that make the present investigation pale in comparison—we’re probably kidding ourselves if we think this will ultimately change anything.
For more on the Facebook-Instagram deal…
- FTC to investigate Facebook purchase of Instagram (news.cnet.com)
- Facebook’s Instagram acquisition will undergo long investigation, as FTC delivers ‘second request’ (thenextweb.com)
- Expect a 6 month freeze on Facebook’s Instagram acquisition (gigaom.com)
- Instagram Future Uncertain As Facebook Releases New ‘Facebook Camera’ App (FB) (experts-exchange.com)
- Instagram grew 78 percent in April, but where does it fit into Facebook’s plans? (digitaltrends.com)