Google, Twitter quizzed on Facebook-Instagram: source
(Reuters) - The U.S. Federal Trade Commission has reached out to Google Inc and Twitter in an investigation into Facebook Inc's $1 billion acquisition of photo-sharing service Instagram, a source familiar with the probe told Reuters.
Context & Ripple Effects
The FTC's investigation into Facebook's $1 billion purchase of Instagram has moved past the deal parties themselves: Reuters reports, citing a single unnamed source familiar with the probe, that the agency has reached out to Google and Twitter. The investigation itself is confirmed; the approach to the two rivals rests on one source and has not been officially acknowledged. The story still travelled unusually wide for a sourcing-driven scoop — Engadget, Fast Company, TechCrunch, Mashable, the Los Angeles Times, the New York Times' Bits blog, Phone Arena, and The Next Web all carried it the same day.
What the questions would signal matters more than who got asked: reaching out to Google and Twitter suggests the FTC is testing whether Instagram was a nascent competitor to social platforms — days after Google launched its [[a:none|Google+ mobile app]] aimed squarely at sharing moments online — rather than just another photo filter utility.
First-order effects
- Facebook's $1 billion Instagram acquisition now sits under an active FTC review, leaving closing timing exposed until the agency decides whether to clear or challenge the deal.
- If the reported outreach holds, Google and Twitter become information sources in the docket, compelled to describe how they view Instagram competitively — testimony that cuts against their rival either way.
Second-order effects
- Sellers of fast-growing consumer apps face repricing: if the FTC stalls even a clean-looking $1B exit over nascent-competition questions, acquirers and founders alike have to build regulatory delay into deal terms.
- Competing photo and social products get breathing room — any rival Facebook might have absorbed next is harder to buy while the agency's posture toward small-but-viral acquisitions remains untested.
Third-order effects
- If this review becomes the template, antitrust scrutiny shifts from revenue-based merger math toward growth trajectories and network effects, making every major platform's tuck-in acquisition of a rising app a potential regulatory event.
- A precedent built on treating zero-revenue apps as markets in their own right would force platforms to defend acquisitions of nascent rivals on competition grounds — a standard whose reach neither Facebook nor the FTC has yet defined.
The trend: Antitrust enforcement is beginning to reach dominant internet platforms' acquisitions of tiny, fast-growing rivals, judging deals on nascent competition rather than current revenue.