Facebook’s $400m deal to buy Giphy being investigated by UK watchdog

12 Jun 2020264 Views

Image: opturadesign/Depositphotos

The UK’s competition watchdog said it is investigating the Facebook deal that aims to integrate the GIF platform into Instagram.

An investigation is to get underway into whether Facebook’s planned acquisition of Giphy would create an uncompetitive market in the social media sector. Facebook announced plans acquire the GIF-sharing platform last month in a deal reported to be worth $400m.

The UK Competition and Markets Authority (CMA) published a statement today (12 June) saying that any actions related to the acquisition will not be allowed unless Facebook has consent from the CMA. Such actions include how the two will integrate their products or merge teams.

“The CMA is considering whether it is or may be the case that this transaction has resulted in the creation of a relevant merger situation under the merger provisions of the Enterprise Act 2002 and, if so, whether the creation of that situation may be expected to result in a substantial lessening of competition within any market or markets in the UK for goods or services,” it said.

Comments from third parties in relation to the investigation are now open until 3 July 2020. A spokesperson for Facebook said that the company is “prepared to show regulators that this acquisition is positive for consumers, developers and content creators alike”.

Promises from Instagram

With an estimated 700m viewers of Giphy content each day, Facebook’s acquisition was designed to give the social media company leverage as it competes with new rivals such as TikTok by building the GIF platform into Instagram.

Support Silicon Republic

However, other platforms such as Twitter and Slack have integrated Giphy support, allowing a user to search and share a GIF. This raised concerns that Facebook and Instagram would restrict third parties from using Giphy.

However, Instagram’s vice-president of product, Vishal Shah, issued a statement to say that developers will still be able to integrate Giphy into their platforms. He added that 50pc of Giphy’s traffic currently comes through Facebook’s products.

“Giphy will continue to operate its library (including its global content collection), and we’re looking forward to investing further in its technology and relationships with content and API partners,” Shah said last month.

“People will still be able to upload GIFs; developers and API partners will continue to have the same access to Giphy’s APIs; and Giphy’s creative community will still be able to create great content.”

Giphy app on a smartphone. Image: opturadesign/Depositphotos

Colm Gorey is a senior journalist with Siliconrepublic.com

editorial@siliconrepublic.com