Facebook-Instagram deal faces scrutiny

US regulatory body the Federal Trade Commission has asked for more information from Facebook before approving the company's US$1 billion purchase of photo sharing app Instagram, first announced in April.

 

The request goes some way to explaining why Facebook went ahead and launched its own photo sharing app last week, as it means the acquisition may not be finalised for months to come.

 

Facebook's shares have plummeted to US$28.84 since the company debuted on the Nasdaq twelve days ago, a drop of 24% from the opening price of US$38.

 

According to a Reuters report, although the FTC automatically reviews any acquisition worth over US$68.2 million, the regulator's interest in this particular deal may have been attracted by the high unusually high purchase price.

 

Instagram had been valued at around US$500 million just days beforehand, the report says.