UPDATE: UK officials investigating Facebook/Instagram deal

By Alex Veeneman on June 25, 2012

Facebook CEO Mark Zuckerberg, who announced Facebook’s purchase of Instagram April 9. The deal is being investigated by Britain’s Office of Fair Trading.
(Photo courtesy of Flickr user silverisdead)

Britain’s Office of Fair Trading is investigating Facebook’s $1 billion purchase of the social photo site Instagram.

A spokesman for the OFT told Uloop the deal met its criteria for their share of supply test, but added that matters of jurisdiction are also being considered. “As in all merger investigations, in addition to considering questions of jurisdiction, we also consider whether the merger creates a realistic prospect of a substantial lessening of competition,” the spokesman said. “For example, we would be interested in investigating the competitive positions of Facebook and Instagram, whether Instagram has the potential to become a strong competitor to Facebook, and how the merger may therefore potentially affect advertisers and the merger parties’ users.”

The spokesman added that the OFT would be looking into the issue of allowing users to upload photos from Instagram to other social networks and to Facebook utilizing separate apps.

A report from the British newspaper The Guardian says the Federal Trade Commission, which looks into mergers and acquisitions in the US, is said to be also investigating the matter. A spokesman for the Federal Trade Commission confirmed to Uloop that the deal was being investigated.

Facebook did not respond to Uloop’s request seeking comment, but in a statement to The Guardian, the company said they would work with the Office of Fair Trading to address any questions. “We’ll continue to work closely with the OFT and look forward to answering any questions that arise,” the statement read.

Facebook purchased Instagram for $1 billion on April 9. The Guardian says Instagram has 30 million users through its app on the iPhone since being founded in late 2010. Facebook has over 900 million users as of March 2012, according to official information from the company.

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