UK regulators have ordered Facebook to pause its acquisition of GIF publishing site Giphy in order to review the deal for antitrust concerns.
The Competition and Markets Authority's (CMA) investigation will look at whether the Giphy acquisition will undermine market competition in the UK. Under the order, the two companies are barred from integrating their businesses and must carry on as separate entities during the review period.
Both Facebook and Giphy are based in the US. However, under CMA’s authority, the UK regulator can investigate a foreign company if the combined merger will have “at least a 25 percent share of any reasonable market.”
(Photo by Rob Kim/Getty Images for Tribeca Film Festival)
The CMA announced the probe days after regulators in Australia also announced they would investigate the deal over worries the Giphy acquisition will enable Facebook to undermine rival social media apps.
Giphy is a leading provider of GIFs, which anyone can use for free. The company also serves the animated images on social media apps including Facebook, Instagram, Twitter, TikTok, and Snapchat in addition to chat apps including Apple’s iMessage. As a result, when the acquisition was announced last month, many internet users were concerned Facebook would remove Giphy access from rival products.
Facebook says it has no plans to restrict access to Giphy’s API, which enables third-party sites to load up the animated GIFs. “Developers and API partners will continue to have the same access to Giphy, and Giphy’s creative community will still be able to create great content,” the a company spokesperson told PCMag.
According to Facebook, the company wants to use Giphy to make conversations on Instagram more entertaining. “Giphy has little user data,” tweeted Adam Mosseri, Facebook’s head of Instagram, last month. “The API, which comprises the vast majority of usage as you say, includes an optional ID which can be anything.
“The data that is valuable is understanding what's trending in the world,” he went on to say. “Instagram is about culture, and understanding what's hip, is, yes useful to know and will help make both Giphy and Instagram better.”
Facebook didn't directly answer whether the company would obey the UK's antitrust order, which can impose fines on the social network for failing to comply. A company spokesperson simply said: “We are prepared to show regulators that this acquisition is positive for consumers, developers, and content creators alike.”
The US Federal Trade Commission did not immediately respond to a request for comment on whether it was embarking on a similar investigation. But the regulator is already probing Facebook for other potential antitrust violations.
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