The agency has spent more than a year investigating Facebook on antitrust grounds, but no final decision has been reached on whether to sue the company, the WSJ reported. The probe of Facebook is part of a broader investigation of market-leading Internet firms initiated by the FTC and a collection of other state and federal offices.
Facebook shares dropped 2.7% in after-hours trading following the report.
Sources told the WSJ that the FTC interviewed Facebook CEO Mark Zuckerberg in the course of the investigation, and that charges could be filed by the end of this year. The lawsuit needs to pass muster with the FTC's five-member commission, which will vote on whether or not to file charges.
Past reports suggested that investigators were honing in on Facebook's long track record of copying, or acquiring, smaller apps that were perceived as a threat to the social media giant.
At a recent House Judiciary hearing focused on antitrust issues, lawmakers produced emails from Zuckerberg in which he discussed possible acquisition offers of Instagram and Path, a location-based social app.
In one, Zuckerberg fretted about competitive upstarts like Instagram and Path, writing: "the businesses are nascent but ... they could be very disruptive to us."
Zuckerberg defended Facebook's actions at the hearing by calling its acquisition of Instagram an "American success story" that allowed the app to prosper.
Facebook shares are up 30% year to date.