Most mergers valued at more than $66 million must be reported to the FTC, and preliminary reviews by the agency are common. But the investigation of Facebook for any competition issues could upset its plans to close the deal by the end of June.
Maxwell Blecher, an antitrust attorney with Blecher & Collins, said an antitrust probe would likely take at least a month.
“If they go into it further and they issue additional requests for information that could probably take up to six months,” he told IDG News Service.
The FTC has already collected information from at least two of Facebook’s largest competitors, according to the FT report, which cited unnamed sources. Facebook will not be able to integrate Instagram’s service with its social networking platform before the deal is finalized.
That delay could hurt Facebook’s efforts to strengthen its mobile strategy. Facebook has said in regulatory filings that its revenue will suffer as users increasingly access its service from mobile devices rather than PCs.
New York Times blog, Bits poses an interesting view: Could the government be interested in whether the company is killing off a potential rival by swallowing it up?
Facebook today is the dominant social network, and it commands the lion’s share of advertising in the social network market. Instagram had no advertisements, but it could have one day started to attract advertisements.
That would have meant real competition for Facebook, especially on mobile devices, where the social network has been unable to, by its own admission, generate “meaningful revenue.”
A rival that happens to be hugely popular on mobiles could have potentially driven down advertising prices.
Facebook announced last month that it planned to buy Instagram for about $1 billion in cash and stock. Competition experts believe the deal will ultimately be approved.