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Technology / Software

Facebook Instagram deal gets the regulatory A-OK

The Instagram purchase, which cost an extraordinary $1bn in cash and shares, was CEO Mark Zuckerberg’s last autocratic act before the company went public on May 18. Facebook shortly after launched its own photo app.

The US Federal Trade Commission voted unanimously to close the investigation, months earlier than expected.

"The Federal Trade Commission has closed its nonpublic investigation of Facebook’s proposed acquisition of Instagram, Inc., without taking any action. Accordingly, the deal may now proceed as proposed."

The UK’s Office of Fair Trading came to the same conclusion last week.

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"In the photo app space, there are several relatively strong competitors to Instagram which appear to impose a stronger constraint on Instagram than Facebook’s new camera app currently does. In the social networking space, the OFT has no reason to believe that Instagram would be uniquely placed to compete against Facebook, either as a potential social network or as a provider of advertising space," the OFT’s decision read.

"Consequently, the OFT does not believe that it is or may be the case that the merger may be expected to result in a substantial lessening of competition within a market or markets in the United Kingdom."

The regulatory authorities were widely expected to continue reviewing the application until later in the year, although this early decision will come as no benefit to Instagram’s 13 staff, many of which were given Facebook shares as part of the deal.

Instagram and Facebook rival Pinterest have been seeing explosive growth in the last 12 months.

Facebook’s IPO, while initially listing at $38 per share, has now plummeted to just $19.44 at the time of print. Much of this has been tied to Facebook’s inability to monetise its advertising on mobile devices, which is increasingly making up more of its viewership.

Instagram, a ‘hipster’ demographic favourite, was seen as an attempt by Zuckerberg to expand the company’s mobile offering, and return some of its ‘cool cachet’. There will still be fears that Facebook plans to do a Microsoft: Embrace, Extend and Extinguish.
This article is from the CBROnline archive: some formatting and images may not be present.