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August 15, 2012

Facebook’s Instagram deal gets green light from UK watchdog

The social network has been cleared to finalise its deal for Instagram after an investigation by the Office of Fair Trading.

By Tineka Smith

The OFT launched an investigation nearly two months ago into Facebook’s $1bn acquisition of Instagram amidst fears that Facebook could monopolise photo uploads.

"The OFT has decided, on the information currently available to it, not to refer this merger to the Competition Commission under the provisions of the Enterprise Act 2002," the OFT said in a statement. "The text of this decision will be placed on the Office of Fair Trading’s website as soon as is reasonably practicable."

The OFT said that a main concern was to ensure that limits would not be placed on people uploading Instagram photos to other social networks.

"From the evidence we received it didn’t suggest that the parties would have the interest to pursue that (monopolisation) as a strategy," an OFT spokesperson told CBR.

In a statement about the Instagram purchase, Mark Zuckerberg said that it was an "important milestone for Facebook" as it was the first acquisition that had a product with a large amount of users.

"We don’t plan on doing many more of these, if any at all," said Zuckerberg. "But providing the best photo sharing experience is one reason why so many people love Facebook and we knew it would be worth bringing these two companies together."

Zuckerberg has said he intends to keep the company running as a separate entity, rather than dissolve it into Facebook completely.

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The OFT had initially expressed concerns that Facebook’s acquisition of Instagram could significantly limit the ability of Instagram photos to upload to other social networking sites as well as other photo apps uploading to Facebook’s site.

The OFT is able to investigate mergers between companies in the UK worth over £70m or that would control 25% of their market.

Facebook is currently under investigation by the U.S. Federal Trade commission about its acquisition of Instagram. The social network said in its updated regulatory filing that it expected the deal to close by the second half of the year.

Please follow this author on Twitter @Tineka_S or comment below.

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