Facebook's first hurdle in its acquisition of Instagram has been cleared after the UK's Office of Fair Trading (OFT) passed the merger. The regulator said the acquisition would not substantially lessen competition for consumers in the country, or place the social network in a position of unfair advantage.
The social network announced the $1 billion purchase a month before its ill-fated IPO. Just a few days before the company floated, the US Federal Trade Commission announced a probe into the billion-dollar merger.
Although it's routine for the FTC to investigate any deal exceeding $68.2 million, it can take as long as six to twelve months to complete, during which Facebook will be unable to integrate any of Instagram's technologies into its popular social networking site.
In June the OFT revealed it would also investigate the deal amid fears that rival apps like Hipstamatic and Camera+ and those using the popular Instagram app may suffer if the acquisition went ahead. Both companies were required to submit assurances before the watchdog made a decision.
"We examined this in light of them both offering social networking services, looking at potential competition in social networking services, and in the supply of photo apps and whether the merger might result in the merging parties limiting people from others using other apps or other sites," a spokesperson for the OFT said.
Further investigation concluded that the deal "would not result in a substantial lessening of competition in the UK," partly because Facebook said Instagram would continue as an independent company and wouldn't stop those using its popular app from uploading to other websites and social networks.
The OFT had until August 23 to refer the deal to the Competition Commission.