UK regulator probes Facebook's bid for Instagram

UK regulator probes Facebook's bid for Instagram

Summary: Facebook and Instagram: a match made in heaven, or a partnership deemed worthy of a U.S. and U.K. trade regulatory investigation?

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What happens when you're the largest social media in the world and have $1 billion to play with? You buy your competitor, of course.

But the U.K.'s trade regulator is worried a Facebook--Instagram merger could restrict or limit other apps' ability to upload to the site, or prevent app photo uploads to other social networks site, .

Its mere involvement could signal a threat to the deal.

The Office of Fair Trading (OFT) can investigate any merger that generates more than £70 million ($110m) in annual revenue, or more than 25 percent combined market share.

Because Facebook has a U.K. office, British authorities believes it can investigate any part of the business, though erred on the side of caution in reference to "whether [the OFT] has jurisdiction over the takeover."

And this is exactly what the OFT plans to do, and has asked "interested parties" to get in touch.

Photo app developers and other social networks et al are invited to lodge their comments and complaints by July 5. If a case appears strong enough to pursue, it can run with it alone or refer it to the U.K. Competition Commission --- the British antitrust authority --- by August 23.

The bid to buy Instagram may not go ahead without the regulator's blessing.

Instagram was snapped up by Facebook in April for $1 billion as part of a company spending spree. Seen as a competitive threat, chief executive Mark Zuckerberg did what any logical company boss would do and bought the company --- taking its users to the social network in the process.

Facebook is on the brink of the 1 billion user mark. User base trajectory over time suggests Facebook has over 950 million users, though the social network has yet to confirm the figure.

U.S. authorities are also probing the merger. The Federal Trade Commission has in the past few weeks issued Facebook with a second request for information as part of its efforts to decide on whether the deal should go ahead.

Facebook said in a statement to sister site CNET that will "work closely with the OFT and look forward to answering any questions that arise," while the OFT was unavailable for comment. Then again, it is extremely early here in London.

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Topics: Government US, Government, Social Enterprise

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2 comments
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  • Seriously?

    When Facebook bought them, Instagram had something like 10 employees and a negligible revenue stream. So it seems rather strange that the authorities are taking an interest in this purchase.
    eortheain
    • He's everywhere

      It seems that there is no business, and no business transaction, no matter how large or how small, that can escape the scrutiny of Big Brother.
      sissy sue