Facebook has finally been given the go ahead to buy Instagram, but the deal is now three quarters of its original value to the mobile photo application firm.
The Federal Trade Commission confirmed this week that it had closed its competition investigation into the acquisition, without taking any action.
The move paves the way for the social networking site to buy Instagram in a cash and shares deal that was initially valued at $1bn (£620m) – made up of $300m (£190m) in cash and roughly 23 million Facebook shares.
But the deal is currently valued on paper at $747.1m (£470m), based on the $19.44 closing price of Facebook’s shares on Wednesday.
Shares of the world’s biggest online social network have declined roughly 50% since the company’s initial public offering (IPO) in May, partly over investor concerns about slowing revenue growth.
The Federal Trade Commission and Britain’s Office of Fair Trading investigated concerns that by acquiring Instagram, Facebook could distort the online advertising market or give Facebook too much power over photo sharing.
Instagram, initially only available for the iPhone, quickly gained 24 million users by February by making it easy to apply retro effects to smartphone photos and share them online via websites including Facebook and Twitter.
Facebook’s purchase of the Instagram application is aimed at bolstering its mobile offering – making it more attractive to advertisers – and ensuring it does not fall into the hands of a rival such as Twitter.
The app allows users to add filters and effects to pictures taken on their devices.
When Facebook announced its intention to buy Instagram, analysts were stunned by the price it was prepared to pay for a vehicle that produced no revenue.
In reaction to the regulatory development, Facebook would not comment on when it expected to complete the deal but said it was pleased it had been cleared.
