Facebook could be forced to sell Giphy, a platform that allows people to find and share animated images known as GIFs, because of concerns the acquisition would harm competition in the social-media and digital-advertising markets.
Facebook purchased Giphy last year for a reported $400 million. The social network said in May 2020 that Giphy would join the team at Instagram, a photo and video sharing service Facebook also owns.
On Thursday, the UK's Competition and Markets Authority said it looked into the Giphy acquisition and had competition concerns that, if confirmed, "could require Facebook to unwind the deal and sell off Giphy in its entirety." The preliminary findings from the UK competition regulator show that the social network's acquisitions continue to be heavily scrutinized by various countries.
Facebook said in a statement that it disagreed with the the CMA's preliminary findings and doesn't believe they're supported by evidence. "As we have demonstrated, this merger is in the best interest of people and businesses in the UK -- and around the world -- who use GIPHY and our services. We will continue to work with the CMA to address the misconception that the deal harms competition," Facebook said in a statement.
The CMA said in a press release that Facebook's purchase of Giphy could lead the company to deny its rivals such as TikTok, Snapchat and Twitter access to Giphy's GIFs unless they provide data about their users in exchange. People use these animated images to express their emotions online, so if a social network doesn't have quality GIFs, that could impact how people use the sites and whether they switch to another one.
Facebook's acquisition of Giphy could also harm competition in digital advertising, the CMA said. Giphy was offering paid advertising to brands in the US and was planning to expand those services to other countries, including the UK. "This would have brought a new player into the advertising market and a potential challenger to Facebook. It would also have encouraged greater innovation from others in the market, including social media sites and advertisers," the CMA said. When Facebook purchased Giphy, though, the company's paid advertising partnerships were axed.
The CMA said it's gathering responses from interested parties before completing its final review, which is due on Oct. 6. Other competition authorities are reviewing the Giphy acquisition as well.
