Facebook May Be Forced to Unwind Giphy Acquisition

(PresidentialInsider.com)- In the spring of 2020, Facebook announced its $400 million plan to acquire Giphy – the online database and search engine that allows users to search for and share GIF files. However, regulators in the United Kingdom last week tossed a wrench in Facebook’s plans.

The UK’s Competition and Markets Authority has determined that Facebook’s acquisition of Giphy would negatively impact competitiveness in the social media market and therefore should potentially be unwound.

The regulatory agency said last Thursday that because millions of posts on social media now include GIFs, any possible 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.” The CMA also pointed out that most major social media sites that compete with Facebook use Giphy GIFs. What’s more as there is only one other major provider of GIFs, namely Google’s Tenor, that leaves other platforms with little choice.

The Competition and Markets Authority also determined that, in total, Facebook along with its current assets Instagram and WhatsApp may already account for 70 percent of the time people spend on social media. Clearly by acquiring Giphy, Facebook hopes to expand the near-monopoly they already have in place.

CMA has given all relevant parties involved time to respond to its early findings before the CMA issues its final report and recommendations by October 6.

In a statement in response to the news, a Facebook spokesperson said that the company does not agree with the CMA’s initial findings which the social media giant does not believe is supported by the evidence.

Instead, Facebook believes that this merger is “in the best interest” of both individuals and businesses both in the UK and around the world “who use Giphy and our services.”

But really what else are they going to say?

When the deal was first announced on May 15, 2020, it immediately prompted antitrust scrutiny from regulators all over the world. Australia is currently conducting its own independent investigation into whether the deal would give Facebook data that expands its market power or harms its competitors.

In the meantime the global integration of Giphy’s services into Facebook’s platforms has been put on hold as the investigations continue.