Mark Zuckerberg’s controversial $1 billion purchase of Instagram is going to gain US regulatory approval — probably by mid-August, a source close to the situation said.
“The FTC does not have the stomach to hold it up longer,” said the source, who would like to see the deal blocked.
Facebook said on May 30 the Federal Trade Commission had issued a second request saying it needed more time to study the proposal.
The deal stirred controversy after Instagram called itself a photo sharer on smartphones, a description that didn’t sit well with critics who argued that because Instagram’s 50 million users can also upload to Facebook and its rivals that it’s closer to a social-networking site.
Instagram a few weeks ago added a feature allowing users to post “photo-likes” to their Facebook account without quitting the app.
Facebook, with nearly 500 million users, has a 60 percent social-network market share. As a general rule, regulators frown on deals that provide acquirers a combined 40 percent share.
In the UK, where a similar probe is under way, a concern is that Facebook could prevent Instagram users from uploading photos to third-party sites. Facebook has said it will keep Instagram a separate entity.
Sam Hamadeh, chief executive of market research firm PrivCo, said there will be a stock “relief” bump when approval becomes clear.
“It will remove some uncertainty in Facebook’s stock because it [the Instagram purchase] happens to address the one area of concern for investors which is mobile, plus Facebook is on the hook for $300 million [in breakup fees] if it doesn’t go through.”
Facebook shares rose 26 cents Friday to $31.73.
An FTC spokesman declined to comment.