Facebook faces £50.5m fine for breaching UK watchdog order

20 Oct 2021

Image: © sitthiphong/Stock.adobe.com

The UK competition watchdog is fining Facebook for its ‘failure to comply’ with orders during an investigation into the takeover of Giphy.

Facebook has been fined £50.5m for breaching an order imposed by the UK’s competition regulator during an investigation into its takeover of GIF creation platform Giphy.

Last year, the social media giant revealed plans to acquire Giphy in a deal reportedly worth $400m. However, just a short time after the merger was announced, the UK Competition and Markets Authority (CMA) said an investigation was underway to establish if the deal would create an uncompetitive market in the social media sector.

Earlier this year, the CMA launched an in-depth investigation into the acquisition, which provisionally found that Facebook’s ownership of Giphy could lead to other platforms being denied access to its GIFs.

But slapping a fine on the social media company today (20 October), the CMA accused Facebook of “consciously refusing to report all the required information” for the investigation’s initial enforcement order.

This order is issued to companies at the beginning of merger investigations, preventing the companies involved from integrating further while an investigation is ongoing.

In a statement, the watchdog said it believed Facebook’s “failure to comply was deliberate” due to the “multiple warnings” given that it had breached the CMA’s rules. It is the first time a company has been found by the regulator to have breached an initial enforcement order.

“This should serve as a warning to any company that thinks it is above the law,” Joel Bamford, senior director of mergers at the CMA said.

“We warned Facebook that its refusal to provide us with important information was a breach of the order but, even after losing its appeal in two separate courts, Facebook continued to disregard its legal obligations,” he added.

Separately, the CMA has fined Facebook £500,000 for changing its chief compliance officer on two separate occasions without seeking consent first. Its investigation into the merger is still ongoing, and the watchdog said it would “work constructively” with Facebook and Giphy as things progress further.

The tech giant’s deal with Giphy is also being investigated in Austria and Australia. Austria fined the company €9.6m in July for failing to notify its competition regulator of the acquisition.

Moving to the ‘metaverse’

Facebook has had a rough few weeks following a major global outage and accusations raised by whistleblower Frances Haugen. The company could also be facing a fine of up to €36m from Ireland’s Data Protection Commission for breaching its transparency obligations under GDPR.

But Facebook is also focusing on its vision for a ‘metaverse’. Earlier this week, it revealed plans to recruit 10,000 people for new high-skill jobs within the Europe over the next five years in line with this strategy, and the company is reportedly considering a name change to reflect the change in focus.

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Blathnaid O’Dea was a Careers reporter at Silicon Republic until 2024.