{{ searchResult.published_at | date:'d MMMM yyyy' }}

Loading ...
Loading ...

Enter a search term such as “mobile analytics” or browse our content using the filters above.

No_results

That’s not only a poor Scrabble score but we also couldn’t find any results matching “”.
Check your spelling or try broadening your search.

Logo_distressed

Sorry about this, there is a problem with our search at the moment.
Please try again later.

It may not be the $1bn deal it was when it was announced in April, but Facebook's acquisition of popular mobile photo sharing service Instagram is a done deal.

Last week, the UK's Office Of Fair Trading gave the nod to the purchase and yesterday, the last regulator standing, the United States Federal Trade Commission (FTC), cleared the deal too.

By a 5-0 vote, the FTC decided that Facebook should be allowed to proceed with the deal, which some suggested could be anticompetitive and deserving of further scrutiny.

But despite concerns over Facebook buying out a young and fast-growing upstart that conceivably posed a threat to the social network's photo sharing hegemony with its savvy use of mobile -- something Facebook is struggling to figure out -- the FTC didn't see any reason to block the deal. Justifications for allowing it to proceed included the prevalance and popularity of other photo sharing apps and the fact that Instagram doesn't have any revenue.

Had the FTC blocked Facebook's Instagram buy, Facebook would have had to pay Instagram a $200m fee, dealing the social network, which has seen its share price battered, another painful blow. But a lot has changed since a pre-IPO Facebook agreed to buy Instagram, raising the question: does the acquisition look nearly as good now?

Instagram has continued grown its userbase significantly since April, and its popularity with brands, many of which are putting it to good use, is surging. Throw in the fact that Instagram team could play an integral role in Facebook's efforts to crack the mobile nut and the rationale for the deal is still in place.

But with Facebook's share price slumping approximately 50% since it went public, at a current value of some $700m, the acquisition actually looks more expensive than it did when it was valued at $1bn. And that means the risk is arguably even higher: if Facebook can't leverage Instagram to figure out mobile, and Instagram as a standalone entity isn't able to add to Facebook's bottom line, the hastily negotiated deal, which is facing even greater scrutiny by financial types, could become yet another reason investors question Facebook and its CEO Mark Zuckerberg.

While it's easy to dismiss these issues as only concerning investors, the reality is that you don't need to own shares of Facebook to have an investment in the world's largest social network. For companies investing lots of time and money in their Facebook presences, the stability and prosperity of the company could very well become a significant issue going forward.

Patricio Robles

Published 23 August, 2012 by Patricio Robles

Patricio Robles is a tech reporter at Econsultancy. Follow him on Twitter.

2380 more posts from this author

Comments (0)

Comment
No-profile-pic
Save or Cancel
Daily_pulse_signup_wide

Enjoying this article?

Get more just like this, delivered to your inbox.

Keep up to date with the latest analysis, inspiration and learning from the Econsultancy blog with our free Daily Pulse newsletter. Each weekday, you ll receive a hand-picked digest of the latest and greatest articles, as well as snippets of new market data, best practice guides and trends research.