The UK’s competition regulator is launching an in-depth investigation of Facebook’s $400m (£290m) acquisition of the gif creation website Giphy over fears that it could lead to a squeeze on the supply of gifs to other social networks such as Snapchat, TikTok and Twitter.
The Competition and Markets Authority (CMA) said on Thursday it was concerned that the takeover may “result in a substantial lessening of competition” for gif creation in the UK and other markets.
The CMA said it had called upon Facebook to address its concerns, but Facebook had refused to do so.
The most popular gif of 2020 was Thank You by Red & Howling, which shows a cartoon dog expressing its thanks to medical staff and essential workers during the Covid pandemic. The gif was viewed more than a billion times, according to Giphy.
The CMA began an initial investigation in January at a time when Facebook was under intense global regulatory scrutiny over competition and privacy concerns.
Following the initial investigation, the CMA said that if the two companies remained merged it could lessen Giphy’s “incentive to expand its digital advertising, leading to a loss of potential competition in this market”. It added that Facebook already accounted for more than 50% of the £5.5bn display advertising market in the UK.
Facebook plans to integrate Giphy into Facebook Messenger and Instagram, which it already owns. It has said Giphy’s integrations with other social platforms such as Twitter, Snapchat and TikTok will not change.
A Facebook spokesperson said: “We will continue to fully cooperate with the CMA’s investigation. This merger is good for competition and in the interests of everyone in the UK who uses Giphy and our services – from developers to service providers to content creators.” Giphy did not immediately respond to a request for comment.
Though both Giphy and Facebook are headquartered in the US, the CMA has the power to investigate mergers where the business being acquired has annual revenues of at least £70m or when the combined businesses have at least a 25% share of any “reasonable” market. The latest CMA investigation has a deadline of 15 September.
