Will Facebook's Instagram Deal Face Antitrust Scrutiny?
Justice and the FTC are also aware that the internet is a dynamic and competitive space where low barriers to entry limit the effectiveness of anticompetitive acquisition strategies. Instagram itself is only 2 years old. It's very possible that the next big thing in photosharing is being developed somewhere at a desk in Silicon Alley right now.
The presence of Google(GOOG) (with Picassa and Google +), Apple(AAPL) (iPhoto), and Yahoo(YHOO) (Flickr) in the social photography space may also help fend off regulators. Can Facebook really be accused of acting anticompetitively with these giants in the market?
Finally, it may be hard to find any harm to consumers here. The ultimate purpose of antitrust laws is to protect consumers. With Mark Zuckerberg promising to keep Instagram open to other social networking platforms, it may be difficult to make out a case that consumers are harmed by the acquisition in any way.
The sticking point is likely to be price. Facebook is paying $1 billion for a company that doesn't make any money and that produces a service--photosharing--that Facebook is already dominating. Regulators may wonder if there's a monopoly premium priced into the deal.
--Written by John Carney at CNBC.