Facebook's $1 billion bid for Instagram to be investigated by the UK Office of Fair Trading

The UK’s Office of Fair Trading (OFT) is to investigate Facebook's $1 billion bid for Instagram, because it is concerned the giant social network might choke off picture uploads to other sites from the app, or else restrict other apps' ability to upload to it.

The UK competition regulator has asked for comments from interested parties, and given them until 5 July – just two weeks away – to respond. The OFT aims first to decide whether it has jurisdiction over the takeover, and will then determine whether to drop its investigation if it does not or cannot see any harmful effects, or to either seek undertakings from the two companies or refer the entire bid to the UK Competition Commission, by 23 August. The OFT has jurisdiction under the 2002 Enterprise Act if two or more enterprises merge to create one with an annual turnover in the UK of more than £70m, or a 25% share of a market is created or enhanced. Facebook has not yet released data about its revenues in the UK, and it is also unclear what share of the UK photo upload market it might have.

While the OFT investigation might derail the takeover, Facebook may initially be more concerned about the ongoing investigation in the US of the same deal by the Federal Trade Commission, which is looking at the same questions as the OFT – namely, whether the takeover might cut off future competition that had been planned by Instagram.