If your immediate reaction to the news that Facebook was buying online photo service Instagram was something along the lines of “How quickly do I have to get all my photos stored somewhere else before Facebook takes over?” then we have some good news: The buyout has hit a slight bump – and a potential delay of anywhere between four months and a year before it takes effect, according to reports.
Multiple reports are surfacing that the Federal Trade Commission is taking a closer look at Facebook’s $1 billion purchase of Instagram, with both Google and Twitter said to have been contacted as part of the investigation according to some reports. It’s unknown why those companies have been contacted, or even why the FTC has initiated a “second review” of the deal so close to Facebook’s much-vaunted IPO offering, but antitrust expert Andre Barlow suggests that “the FTC and DOJ are really concerned about tech markets and the internet,” and that this review is essentially to make sure is are dotted and ts are crossed. “The likelihood is that at the end of the investigation the FTC will not require any remedies and the transaction will be allowed to close,” he told GigaOm.
In practical terms, the investigation will mean that Facebook and Instagram can’t move ahead with any plans to combine their services until after the investigation has been completed and the sale approved, giving competitors – such as Google and Twitter – a chance to bolster their own photo services and potentially undermine Facebook’s photo plans in the meantime. Quite how such a setback is going to affect investor confidence in Facebook’s IPO remains to be seen; a recent poll showed that a worrying 82 percent of international investors (and 74 percent of American investors) believe that the company is already overvalued at $96 billion, and this latest news is unlikely to change their minds.
So far, no party involved with these developments – The FTC, Facebook, Google or Twitter – has offered any official comment on the rumors, but with Facebook’s IPO road show already underway, expect some form of response sooner rather than later.