June 26, 2012, 12:22 PM

U.K. regulators investigate Facebook’s planned Instagram acquisition

The acquisition deal is worth roughly $1 billion.

Zak Stambor

Managing Editor

Lead Photo

An Instagram photo of Facebook's headquarters

Regulators in the United Kingdom are scrutinizing Facebook Inc.’s planned acquisition of photo-sharing mobile app company Instagram Inc. The acquisition is worth roughly $1 billion.

Instagram is a social network of sorts that enables consumers to share and view photos with their friends. Consumers can also comment and Like their connections’ photos.

The Office of Fair Trading is concerned about the implications of the acquisition for both users and advertisers, a spokesman for the agency says.

In particular, it is investigating whether Facebook might prevent Instagram users from uploading photos to other social networks, or might hamper other photo-sharing applications’ ability to upload photos to Facebook. “Facebook hasn’t indicated that that is their intention, but we are interested in looking at their incentives at doing so in the future,” the spokesman says. 

The agency set a July 5 deadline for interested parties to submit comments or concerns about the deal. The Office of Fair Trading will then determine by Aug. 23 whether the acquisition should be referred to another regulatory agency, the U.K. Competition Commission, which is the second phase of the U.K.’s merger investigation process.

"We'll continue to work closely with the Office of Fair Trading and look forward to answering any questions that arise," a Facebook spokesman says, commenting on the investigation.

Facebook has said that it plans to keep Instagram independent of Facebook. “We think the fact that Instagram is connected to other services beyond Facebook is an important part of the experience,” wrote Mark Zuckerberg, founder and CEO of Facebook, in a post on his Facebook Timeline, when the deal was announced in April.

Facebook will pay for Instagram with a mix of 23 million shares of Facebook common stock and $300 million in cash.

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