FTC Approves Facebook And Instagram Merger


The Federal Trade Commission (FTC) announced its approval on Facebook Inc (NASDAQ:FB)’s proposal to acquire Instagram, a mobile photo-sharing app developer, after conducting a thorough investigation to ensure the transaction does not violate any anti-competitive business practices.

FTC Approves Facebook And Instagram Merger

The press statement of the agency cited the Commissioners voted unanimously to close its investigation on the deal.

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Facebook Inc (NASDAQ:FB) was pleased with the FTC’s decision, according to the spokesperson of the social networking giant in an e-mailed statement.

The Office of the Fair Trading (OFT) in the United Kingdom also approved the merger of the companies, and decided not to refer the deal to the Competition Commission last August 14. In June, a report from the Guardian cited the OFT was concerned of the possibility the social networking giant might stifle competition and prevent other sites from using the photo-sharing application. Interested parties were invited by the UK competition regulator to provide their comments regarding the Facebook’s acquisition of Instagram until July.

The OFT received comments and found out there are strong competitors to Instagram in the supply of camera and photo editing apps and the majority believed the “photo apps are not attractive to advertisers on a stand-alone basis, but they are complementary to social networks.”  The regulator concluded the transaction does not lessen competition in the supply of photo apps.

The social network giant offered to takeover Instagram for $300 million cash and 22,999,412 shares last April. At the time, the total amount of the transaction was approximately $1 billion. Based on the stock value of Facebook on Tuesday ($19.44 per share), the total amount of the transaction is approximately $ 747 million.

After receiving the go ahead signal to close the deal from regulatory agencies from United Kingdom and the United States, Facebook will now be able to execute its plan to develop a better photo-sharing app for consumers, while expanding the social network’s mobile strategy and profitability.

Instagram is one of the companies acquired by Facebook Inc (NASDAQ:FB) since its IPO. The social network giant’s CEO, Mark Zuckerberg, promised Instagram would remain independent from Facebook Inc (NASDAQ:FB) and ensure the growth of the app developer through its strong engineering team and infrastructure. On the other hand, Instagram co-founder, Kevin Systrom, said the company is focused on mobility and plans to do something big. A web designer previously observed Instagram was testing the photo-sharing app on its website. Many speculated Facebook is planning to position Instagram as the biggest photo-sharing social network. The app developer has more than 50 million users.

A related report from Financial Times cited that Facebook Inc (NASDAQ:FB) requested the California Department of Corporations to minimize the public awareness regarding the hearing on the fairness of the social network’s request to transfer shares to Instagram. Documents related to the transaction will be evaluated by Atty. Rafael Lirag of the California Department of Corporation, who will preside during the public hearing on August 29.

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