updated 04:29 pm EDT, Thu May 10, 2012
Investigation is described as 'routine' for value
The US Federal Trade Commission is launching a competition investigation regarding Facebook's recent $1 billion buyout of Instagram, say two sources for the Financial Times. The effort has allegedly already begun, with the FTC starting to collect information from "at least two" of Facebook's biggest competitors. The probe is described as routine for deals worth more than $68.2 million, but could delay the Instagram acquisition well past when Facebook told investors things would be completed.
In IPO documents published last month, the company said it expected the acquisition to be finished in the second quarter. Experts contacted by the Times suggest, though, that the investigation could delay the deal's close by six months to a year. "They're going to want to take some months to investigate and understand the market and other players," says Stanford Law School professor Mark Lemley. "And there may be more parties with an interest in submitting information."
"[Facebook is] assuming nothing will happen, which is the face you want to put to investors," says Altimeter Group analyst Alan Webber. "If they don't dig too deep, yeah it's possible it could go that fast. I don't think that's likely."
Any probe will also delay Facebook's ability to exploit Instagram, whether in terms of technology or workforce. Should the deal be blocked, Facebook has promised to still pay Instagram $200 million.