San Francisco (Financial Times) — A competition probe into Facebook’s $1bn acquisition of photo-sharing service Instagram threatens to postpone the closure of the deal beyond the second quarter, the target set by the company in its initial public offering documents.
The Federal Trade Commission has launched the investigation, according to two people familiar with the matter, and has already begun collecting information from at least two of the social network’s largest competitors: Google and Twitter. The process could also further slow Facebook’s already lagging mobile strategy.
The competition probe is routine for any deal more than $68.2m. In this case it could take six to 12 months, according to several experts. But Facebook said in its IPO documents last month that it expected the deal to close in the second quarter.
“That’s terrifically optimistic,” said David Balto, a former policy director at the FTC who now works as an anti-trust lawyer.
Competition experts expect that the Instagram merger will ultimately be approved, but they believe regulators will apply close scrutiny to the deal because of the steep price that Facebook paid and the high profile of the companies.