UK’s watchdog interrupts Facebook’s deal to acquire Giphy

The UK’s Competition and Markets Authority (CMA) ruled that Facebook owning popular short video animations company Giphy might be detrimental to other platforms since the app is vastly popular amongst the social network’s competitors.

As one of the most favored GIF sites, the animations platform provides Facebook, and it’s ecosystem of apps — Facebook Messenger, Instagram, and WhatsApp  — with the necessary tools to create, share, and even remix GIFs.

In June 2020, the CMA initiated an investigation concerning Facebook’s acquisition of the platform, under the pretense that the deal “may be expected to result in a substantial lessening of competition.”

“Following an in-depth investigation, the CMA has provisionally found that Facebook’s takeover of Giphy will negatively impact competition between social media platforms,” the CMA said in a statement on its blog.

“Facebook could require Giphy customers, such as TikTok, Twitter, and Snapchat, to provide more data in order to access Giphy GIFs. Such actions could increase Facebook’s market power, which is already significant. The CMA’s analysis suggests that Facebook’s platforms – Facebook, WhatsApp, and Instagram – account for 70 percent of the time people spend on social media and are accessed at least once a month by 80 percent of all internet users,” the CMA added.

Last year, Big Tech titan was intended to acquire the GIF-maker in a $400 million deal, but Facebook never confirmed the finalized price. The CMA announced that Facebook acquired Giphy following the platform’s plans to create an ads business creating a competitive field with the social networking titan.

UK regulators claim that multi-billion dollar business forced Giphy to terminate those plans after releasing news of the deal – by doing so, Facebook would be remarkably decreasing competition in the marketplace.

Following the CMA’s announcement, both companies cited private documentation submitted to the agency. In May, Facebook informed UK’s watchdogs that Giphy was already dependent on the Big Tech company for a remarkable proportion of its user traffic since it “has no meaningful audience of its own.”

“We disagree with the CMA’s preliminary findings, which we do not believe to be supported by the evidence,” Facebook informed The Verge spokesperson, adding that the company “will continue to work with the CMA to address the misconception that the deal harms competition.”