The U.S. Federal Trade Commission has launched a probe of Facebook's proposed acquisition of Instagram that could delay the closing of the deal, the Financial Times reported on Thursday.
Most mergers valued at more than $66 million must be reported to the FTC, and preliminary reviews by the agency are common. But the investigation of Facebook for any competition issues could upset its plans to close the deal by the end of the second quarter, the FT reported.
Maxwell Blecher, an antitrust attorney with Blecher & Collins, said an antitrust probe would likely take at least a month.
"If they go into it further and they issue additional requests for information, that could probably take up to six months," he told IDG News Service.
The FTC has already collected information from at least two of Facebook's largest competitors, according to the FT report, which cited unnamed sources. Facebook will not be able to integrate Instagram's service with its social networking platform before the deal is finalized, the FT said.
That delay could hurt Facebook's efforts to strengthen its mobile strategy. Facebook's has said in regulatory filings that its revenue will suffer as users increasingly access its service from mobile devices rather than PCs.
The increase in mobile usage has resulted in its daily user base expanding more quickly than the number of advertisements it delivers, Facebook said in amended S-1 filing with the Securities and Exchange Commission Wednesday.
"If users increasingly access Facebook mobile products as a substitute for access through personal computers, and if we are unable to successfully implement monetization strategies for our mobile users, or if we incur excessive expenses in this effort, our financial performance and ability to grow revenue would be negatively affected," the filing states.
Facebook announced last month that it planned to buy Instagram for about $1 billion in cash and stock. Competition experts believe the deal will ultimately be approved, the FT reported.