FTC Probing Facebook/Instagram Deal
A competition probe by the FTC could delay the merger for almost a year, according to the Financial Times.
Days before Facebook’s IPO, The Financial Times reports that the Federal Trade Commission has begun an investigation on Facebook’s $1 billion acquisition of photo-sharing app Instagram. The process is likely to slow the closure of the deal, which Facebook has said would happen sometime in the second quarter.
The competition probe will likely take six to 12 months to complete, the FT reports; sources told the paper that the FTC has already spoken to some of Facebook’s competitors in order to gather information.
Experts told the FT that while they suspect the merger will go through, the FTC will take its time investigating due to the high price of the acquisition–and that Facebook will be unable to utilize the Instagram team (including its mobile developers) until the deal goes through.
“They’re [the FTC] going to want to take some months to investigate and understand the market and other players,” Mark Lemley, a professor at Stanford Law School, told the FT. “And there may be more parties with an interest in submitting information.”
The lag time could be detrimental to Facebook as it scramble to stake a bigger claim in the mobile space. In fact, although the company is technically in its pre-IPO “quiet period,” it also announced Wednesday that it is set to launch its own app center–a move that could bring Facebook into closer competition with both Apple and Google.—Maeghan Ouimet
Photo courtesy of johnnymip