Zuckerberg tight-lipped about lack of progress on Instagram deal
It’s been over three months since Facebook announced it would buy mobile photo sharing application and social network Instagram for a combination of cash and shares worth up to $1 billion, but nothing has come of it yet. When asked about the status of the deal during today’s second quarter earnings call, Facebook CEO Mark Zuckerberg’s answer was short and to the point, saying as the deal hasn’t closed and there has been no integration between the two companies at all.
Although the transaction was originally pegged to close during Q2, Facebook later changed its estimates to sometime in 2012. It’s likely that a Federal Trade Commission investigation of the deal — a standard procedure for acquisitions over $66 million — has slowed down the proceedings.
The majority of deals reviewed by the FTC go through after the first, preliminary review, but until the deal is approved, the companies have to operate independently. According to the S-1 Facebook filed in advance of its initial public offering, the company has agreed to pay Instagram a $200 million termination fee if the acquisition doesn’t close.
What we found interesting about Zuckerberg’s comments on the deal were the lack of positive forward-looking statements. He did not say anything about working with the company in the future, or allude to any possible integration. He also declined to provide any additional information about when the deal is expected to close, simply saying that Facebook would issue an update.
The entire deal was reportedly made over a weekend, mostly between Zuckerberg and Instagram founder Kevin Systrom alone. Surprisingly, Facebook launched its own photo filtering and sharing iOS app called Camera just over a month later.