Competition probe delays Facebook’s Instagram buyout

11 May 2012

Facebook users might be left waiting quite some time before any Instagram features are implemented as an FTC investigation into the deal could take up to a year to complete.

America’s Federal Trade Commission (FTC) has launched an investigation into Facebook’s US$1bn buyout of Instagram, a source familiar with the probe told Reuters.

Competition probes are standard procedure with any deal worth more than US$68.2m, but analysts believe the sky-high price of the Facebook-Instagram deal, as well as Facebook’s status as the world’s No 1 social network, will place this deal under closer scrutiny, which could greatly delay proceedings.

Though in its IPO documents, Facebook optimistically estimated the deal would be wrapped up by the close of the second quarter, experts claim investigations like this can take from six to 12 months to complete, and Facebook will not be permitted to incorporate any of Instagram’s technology until the deal has been fully approved.

The FTC has already contacted Google and Twitter for information, and many more key players may be approached before the investigation is complete. It’s unlikely the deal will be challenged, but the time taken to complete the probe could negatively impact on Facebook’s upcoming, and potentially record-breaking, IPO.

Facebook already conceded to amend its IPO documents to highlight its weaknesses in mobile advertising, and the added Instagram delay could be a further deterrent to potential investors.

Elaine Burke is the host of For Tech’s Sake, a co-production from Silicon Republic and The HeadStuff Podcast Network. She was previously the editor of Silicon Republic.