(Adds Facebook's acquisition strategy, analyst quote)
By Katie Paul and Jan Wolfe
Aug 1 (Reuters) - The U.S. Federal Trade Commission is investigating whether Facebook Inc acquisitions were aimed at buying up potential rivals before they could become a threat to the social media company, the Wall Street Journal reported on Thursday, citing people familiar with the matter.
The company's acquisition practices are the main focus of the probe, as the FTC looks into Facebook buying technology-based startups to keep them from challenging it, the report said.
The world's largest social network has purchased nearly 90 companies since 2003, according to data provided by S&P Global. Those include messaging service WhatsApp and image sharing app Instagram, both of which have since grown into social behemoths in their own right.
Facebook last week said the FTC had opened an antitrust investigation in June looking into the areas of "social networking or social media services, digital advertising, and/or mobile or online applications."
Both FTC and Facebook, whose shares Facebook shares fell 0.77% declined to comment on the report.
The U.S. Justice Department said on July 23 it was opening a broad review of major digital technology firms, looking into whether they engage in anticompetitive practices, a clear signal that President Donald Trump's administration is stepping up its scrutiny of the industry.
In June, Reuters reported that the FTC and the Justice Department, which enforce U.S. antitrust laws, have divided oversight over the big four tech companies, with Amazon.com Inc and Facebook under the watch of the FTC, and Apple Inc and Alphabet Inc's Google under the Justice Department.
Last month, Facebook settled an FTC probe into allegations of inappropriately sharing data of 87 million users with the now-defunct British political consulting firm Cambridge Analytica. Facebook will pay a record-breaking $5 billion fine.
The company has increasingly relied on its acquisitions to power growth in recent years, as the number of new users signing up for its core "blue app" has tapered off in lucrative markets. According to its most recent figures, more than 2.7 billion people use one of Facebook's family of apps each month.
While Facebook does not release user or revenue figures for each service, executives presenting the company's earnings last week cited Instagram as a key driver of ad impression growth, the company's main source of revenue.
George Hay, a professor of antitrust law at Cornell University and a former Justice Department lawyer, said the FTC's investigation of Facebook is likely to focus on section two of the Sherman Act, which makes it unlawful to acquire monopoly power through improper means.
Facebook will likely argue that there were valid, pro-consumer justifications for its acquisitions, and Hay said it may be difficult for the FTC to prove the transactions undermined competition.
"It is a possible theory, but it is not a compelling theory," Hay said. "I think the FTC will do a thorough job but it is not obvious to me they will build a case out of it."
In Washington, Democrats and Republicans alike have expressed growing concern about the size of the largest tech firms and their market power. Democratic presidential candidate Elizabeth Warren has called for breaking up companies like Amazon, Apple, Google and Facebook and unwinding prior acquisitions.
In July, the House of Representatives Judiciary Committee's antitrust panel pressed executives from the four firms about their competitive practices and noted that Google, Facebook, Amazon had a rising share of key markets.
Members of Congress have also expressed concern about Facebook's control of vast amounts of user data, citing the Cambridge Analytica scandal and a string of other privacy breaches.
It is rare for the U.S. government to seek to undo a consummated deal. The most famous case in recent memory is the government's effort to break up Microsoft Corp. The Justice Department won a preliminary victory in 2000 but was reversed on appeal. The case settled with Microsoft intact.
Reporting by Sayanti Chakraborty in Bengaluru, Katie Paul in San Francisco and Jan Wolfe in Washington;Editing by Cynthia Osterman