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| Facebook's acquisition of Giphy raises competition concerns |
The UK competition authority has announced that Facebook's acquisition of the popular GIF website Giphy is raising competition concerns.
The Competition and Marketing Authority said it had provisionally found that Facebook's acquisition of Giphy affected competition among social media platforms. It eliminates potential competitors in the display advertising market.
The regulator added that it may ask the social media giant to break the alleged $400 million deal and sell Giphy once the competition case is confirmed.
This is the latest sign that UK regulators are unhappy with the power of tech giants in Silicon Valley. It is also a rare example of outside regulators trying to close a deal between two US companies.
Millions of GIFs have been shared on social media sites like Twitter, Snapchat and Tik Tok. As well as by email and SMS.
Most social media platforms rely on access to the Giphy movie database. Some of them also come from Google's content.
The agency said that Facebook's ownership of Giphy could lead to other platforms blocking access to their GIF.
She added that any drop in quality or choice of films could have an impact on how people use social media and whether they move to another platform.
The Facebook platform accounts for more than 70% of the time people spend on social media.
The head of the independent investigation team, which is in the final stages of the investigation, said Facebook may pull GIFs from competing platforms or require users to provide more data to access them.
"The deal also eliminates the company's potential competitors in the £5.5 billion display advertising market," he added.
Facebook's acquisition of Giphy is cause for concern
Although the investigation revealed serious concerns about competition. But these concerns are temporary. The committee will consult its findings before completing the review.
If it comes to the conclusion that the merger harms the market and social media users, it will take the necessary steps to ensure that the individual is protected.
Facebook and Giphy are headquartered in the United States. However, if the acquired company has annual sales of at least 70 million pounds (88 million US dollars) or the merging company has at least 25% of a reasonable market, UK regulators can investigate the merger.
A Facebook spokesperson said the company did not agree with the panel's preliminary findings. As we have made clear, this association is in the best interest of individuals and companies who use GIPHY and our services in the UK and around the world. We will continue to work with authorities to resolve misconceptions that transactions are not conducive to competition.
At the time of the acquisition, the company announced that it would continue to integrate Giphy with the Instagram platform to help people find the right way to express themselves.
The company previously tried to play down claims that the deal might reduce competition. A spokesperson said in May 2020: Developers and partners continue to have the same access to Giphy. The Giphy creative community is still able to create the content. We are ready to show regulators that this acquisition is beneficial to consumers, developers and content creators.