What you need to know
- The UK Competition and Markets Authority has released its preliminary findings into its investigation of Facebook's Giphy acquisition.
- It says the deal raises competition issues.
- The body says it might make Facebook sell Giphy.
Facebook could be forced to sell Giphy on the back of findings made by the UK's Competition and Markets Authority.
The body announced its findings today stating:
The CMA has provisionally found Facebook's merger with Giphy will harm competition between social media platforms and remove a potential challenger in the display advertising market. The merger brings together Facebook, the largest provider of social media sites and display advertising in the UK, with Giphy, the largest provider of GIFs.
If the Competition and Markets Authority's (CMA) competition concerns are ultimately confirmed, it could require Facebook to unwind the deal and sell off Giphy in its entirety.
According to the release the CMA has "provisionally" found the Facebook's takeover of Giphy "will negatively impact competition between social media platforms", it explains:
Millions of posts every day on social media sites now include a GIF. Any reduction in the choice or quality of these GIFs could significantly affect how people use these sites and whether or not they switch to a different platform, such as Facebook. As most major social media sites that compete with Facebook use Giphy GIFs, and there is only one other large provider of GIFs – Google's Tenor – these platforms have very little choice.
The body is concerned the deal could see it deny other platforms access to its GIFs or change the terms of the access, making platforms like Twitter and Snapchat hand over more user data to keep using the product. The CMA also notes that Giphy's own paid advertising was in competition with Facebook and that buying up the company may have removed a market competitor for Facebook. Similar concerns were raised by the company's deals for WhatsApp and Instagram. The inquiry chair Stuart McIntosh said "Millions of people share GIFs every day with friends, family, and colleagues, and this number continues to grow. Giphy's takeover could see Facebook withdrawing GIFs from competing platforms or requiring more user data in order to access them. It also removes a potential challenger to Facebook in the £5.5 billion display advertising market. None of this would be good news for customers."
Facebook announced plans to buy Giphy in May of 2020 in a deal reportedly worth $400 million.
Other interested parties now have until September 2 to respond, and possible remedies must be submitted by August 25. A final report will be issued on October 6.