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Facebook’s Instagram purchase gets go-ahead

In what is one of the biggest social media pair-ups to date, the Office of Fair Trading (OFT) has given the green light for Facebook’s takeover bid for photo-sharing app Instagram.

In April, a month prior to Facebook’s initial public offering, the company announced that it was purchasing Instagram for £637 million.

However, the OFT’s investigation of the merger, over fears that it would limit people’s choice and ability to use other services and apps, proved to be a potential stumbling block for the deal.

OFT approval

But this potential barrier has now been removed as the OFT has given the deal the thumbs up, meaning it won’t be referred to the Competition Commission.

Since its launch in 2010 Instagram has amassed 50 million users. The app has also formed part of the marketing strategy for many key brands.

Although Facebook is the most recognisable social media brand in the world, the company reported losses of $157m in the second quarter.

More mobile Facebook users

A week prior to its Wall Street floatation, Facebook said that the number of users of its apps for smartphones and tablets is growing at a more rapid rate than the number of adverts is it delivering.

The company attributed this to the fact that it has not developed a mobile advertising strategy to utilise the ever-increasing number of mobile users. Facebook said:

“We believe this increased usage of Facebook on mobile devices has contributed to the recent trend of our daily active users increasing more rapidly than the increase in the number of ads delivered,”

A competition probe by the American Federal Trade Commission may mean that Facebook’s acquisition of Instagram could be delayed by up to a year.

The social networking giant also admitted that “our financial performance and ability to grow revenue would be negatively affected” if they could not capitalise on the growing number of people using mobile devices to communicate with friends and post pictures.

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