FTC investigates Facebook's $1 billion purchase of Instagram

Washington -  The U.S. Federal Trade Commission (FTC) is investigating Facebook's purchase of photo-sharing Instagram costing about one billion dollars.

The routine investigation could take about six months to a year to complete, resulting in the delay of the deal's anticipated second-quarter closing, Los Angeles Times. Co reports.

Sources have said that the FTC has already started gathering data from some of the social network's rivals.

Although the deal may ultimately be approval, experts have said that regulators will carefully scrutinize it because of the high price and profile of the companies.
 
Deals for more than 66 million dollars typically undergo greater regulatory scrutiny, under current antitrust law.

Initially, the FTC and Department of Justice do a preliminary review to determine whether any antitrust concerns come up warranting closer examination.

The majority of deals reviewed by the FTC and Justice Department are allowed to proceed after preliminary review. However, companies have to provide more information if there's a second request.

Facebook has warned investors on its pre-IPO tour that it faces a significant challenge making money from mobile devices, as advertising has lagged behind the shift to mobile devices. A significant impetus behind the play for Instagram was to bolster its mobile strategy.

If the deal is finalized, Facebook would pay Instagram a termination fee of 200 million dollars.