The UK Competition and Markets Authority (CMA) has decided to refer last year’s acquisition of Giphy by Facebook for an in-depth investigation after a preliminary probe raised competition concerns in relation to digital advertising and the supply of GIFs. The regulator said it found evidence that Giphy had planned to expand its digital advertising partnerships to other countries, including the UK, before the deal was announced, and that the merger with Facebook would give Giphy less incentive to proceed with that expansion, prompting a loss of potential competition.
The CMA also found that the deal could harm rival social media platforms, as it could mean Giphy would stop supplying GIFs to these companies or do so on worse terms. This could potentially lead to reduced choice for users and further increase Facebook’s market power in relation to social media, said the watchdog. It is now expected to conclude its phase 2 investigation by 15 September.
Giphy is an online database and search engine that allows users to share GIFs and stickers either via Giphy’s website or app, or through online platforms such as Facebook, Instagram, Twitter, and Snapchat. Facebook reportedly paid around USD 400 million to acquire the company in May last year.
