Why The OFT And FTC Let Facebook Buy Instagram: FB Camera Is Tiny, IG Makes No Money, And Google
Evidence from Facebook and Instagram plus analysis from outside experts has convinced the Federal Trade Commission to today approve the landmark acquisition.
Context & Ripple Effects
The FTC's approval closes out a review that began in earnest in May, when Reuters reported regulators had quizzed Google and Twitter about the competitive dynamics of mobile photo sharing before signing off. The UK's Office of Fair Trading had already cleared the $1 billion deal on August 14, so Washington was the last gate standing.
The case turned on market definition rather than size: Facebook's own Camera app is tiny, Instagram generates no revenue, and Google's presence in photos gave the FTC a credible counterweight to point to. The approval also lands weeks after Bloomberg reported Twitter had weighed buying Camera+, underscoring how many buyers were circling standalone photo apps.
First-order effects
- Facebook completes its largest acquisition to date, folding Instagram into a company that already runs its own photo product — the two-app strategy SplatF argued for in May.
- Twitter loses Instagram both as a potential acquisition target and as an increasingly close partner, since the photo network now answers to its chief rival.
Second-order effects
- Standalone photo apps like Camera+ become more valuable to Twitter and other social platforms as defensive buys, with one fewer independent home for mobile photographers.
- Google's photo products inherit the role of the FTC's designated competitive check, raising the stakes for whatever Google does next in mobile photo sharing.
Third-order effects
- The decision sets a template for how US and UK regulators judge consumer internet deals: revenue-light apps in fast-moving categories get cleared when a large adjacent competitor exists — a standard that will be tested every time a dominant platform buys a rising app.
- If the pattern holds, early-stage photo and social startups face a narrower path: sell to a platform giant or compete against one, with antitrust unlikely to intervene at these sizes.
The trend: Antitrust review of consumer tech acquisitions is converging on a market-definition test where big-platform rivals substitute for structural remedies, clearing the way for platforms to absorb nascent competitors.