Facebook Instagram purchase under scrutiny

Law expert Alan Davies looks at possible 'competition concerns'

While Instagram has just received a very Facebook-friendly update the UK competition authority are looking into whether this new ownership is actually legal

Competition law expert Alan Davies from Pinsent Masons has spoken out about the current investigation into Facebook's purchase of Instagram saying that certainly in the UK such a purchase would cause 'competition concerns'.

Facebook and Instagram are currently under investigation by the Office of Fair Trading after concerns were raised that the $1bn purchase could severely lessen competition.

While the purchase itself is legal Alan Davies goes on to explain that it's not just about the financial aspect but also about whether Facebook has sufficiently hindered any competitive opportunities through acquiring the company.

"The OFT will be seeking to understand whether Facebook's acquisition of Instagram would enable it to prevent competing apps from being able to upload pictures to Facebook, or restrict the use of the Instagram app from uploading pictures to other social networking sites including Twitter – given the strong market position of Facebook, this potential market foreclosure would be likely to cause competition concerns."

This will no doubt become all the more relevant after Instagram just updated its app for Android and iOS with dedicated Facebook 'like' buttons whilst also allowing users to directly upload their photos straight to Facebook.

Facebook has continued to maintain that the purchase was legal and has agreed to answer any questions the OFT has on the investigation.

Source: Out-Law.com