Meta fined £1.5m by UK watchdog for breaching competition orders again

4 Feb 2022

Image: © Postmodern Studio/Stock.adobe.com

The UK’s competition watchdog said Meta failed to inform it of key staff movements as per orders relating to the acquisition of Giphy.

The UK’s Competition and Markets Authority (CMA) has slammed Facebook parent company Meta with a fine for the second time in six months for breaching orders during a probe into the acquisition of Giphy.

In October, Meta was fined more than £50m by the CMA after it “significantly limited the scope of compliance reports” relating to an initial enforcement order placed on the company as the watchdog investigated its plans to acquire Giphy.

Future Human

The latest fine of £1.5m is a result of Meta’s failure to comply with CMA orders to inform the competition authority of any material changes to the business, such as resignations and redistribution of key staff.

In a statement today (4 February), the CMA said Meta had failed on both accounts after three key staff members resigned and had their roles reallocated without the watchdog being informed. All three individuals had been previously included in a list of key staff provided to the CMA by Meta.

Joel Bamford, senior director of mergers at the CMA, said that this was not the first time Meta failed to alert the competition authority in advance of important changes “despite knowing they were legally required to do so”.

“Initial enforcement orders are an integral part of our mergers toolkit and ensure the CMA is able to take effective action if we find competition concerns,” added Bamford. “Breaches like this one threaten our ability to maintain the benefits of competition for people using these products and services.”

The initial enforcement order was issued by the CMA in June 2020 when the watchdog began its investigation into the takeover of Giphy. In November 2021, Meta was asked to sell Giphy after the CMA found that the acquisition would reduce competition between social media platforms.

“The tie-up between Facebook and Giphy has already removed a potential challenger in the display advertising market,” Stuart McIntosh, chair of the independent inquiry group that carried out the in-depth CMA investigation, said at the time.

“Without action, it will also allow Facebook to increase its significant market power in social media even further, through controlling competitors’ access to Giphy GIFs.”

Although Meta is appealing the November ruling, it told Reuters that it is willing to pay the latest CMA fine. “We intend to pay the fine, but it is problematic that the CMA can take decisions that could directly impact the rights of our US employees protected under US law,” a Meta spokesperson said.

Meta is already having a bad week after its disappointing earnings results published on Wednesday (2 February) showed lower-than-expected profits and a dip in Facebook’s daily active users for the first time, causing shares to plunge by more than 20pc in after-hours trading.

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Vish Gain is a journalist with Silicon Republic

editorial@siliconrepublic.com