Facebook's acquisition of Giphy is raising competition concerns
Facebook's acquisition of Giphy is raising competition concerns

The UK Competition and Markets Authority (CMA) has announced that Facebook's acquisition of popular movie site Giphy (valued at nearly $ 400 million) has raised concerns about digital advertising and the delivery of short videos.

CMA announced that the first phase of the investigation, which began on January 28, is complete, saying: Giphy is competing with Facebook outside of the UK in digital advertising through paid partnerships with brands like Pepsi and Dunkin. Before the deal, it was announced on Thursday May last year.

CMA stated that if Giphy maintains its integration with Facebook, it may not have an incentive to expand its digital ads, and as a result, it will lose potential competition in the market.

The UK Competition and Markets Authority is now planning to move the investigation to Level Two, unless the company makes a legally binding proposal to address competition concerns within the next five business days.

A Facebook spokesperson said: The company will continue to investigate the UK Competition and Market Authority.

Facebook and Giphy are headquartered in the United States. However, if the annual sales of the acquiring company reach at least $ 88 million or the combined company's turnover reaches 25%, the agency may investigate the merger at least a percentage of a reasonable market.

Authorities found evidence that Giphy plans to expand the digital advertising partnership to other countries, including the UK, which is of concern given that Facebook accounts for more than 50% of the digital advertising market by 5.5%.

According to AMC, social media companies competing with Facebook could also fail if Giphy stops providing them with GIFs.

Giphy has built a digital database and search engine that allows people to share GIFs through websites or apps, or through social media platforms like Facebook, Instagram, and Twitter.

"As the UK competition authority, it is our responsibility to keep the market competitive," the agency said.

She added: It is important to ensure that Facebook does not use its strong position in the market to stifle competition. If the company doesn't address our concerns, we'll conduct a deeper review to ensure consumers and businesses don't fail.

A Facebook spokesperson said: This merger is good for competition and for everyone in the UK who uses GIPHY and our services - from developers to service providers to content creators.

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