Facebook to Face Antitrust Scrutiny After Swallowing Up Another Web Service

Facebook’s acquisition of the popular site Giphy will face an in-depth investigation from UK antitrust regulators, according to recent reports.

MarketWatch reports that Facebook’s acquisition of the GIF site Giphy is facing an in-depth antitrust investigation from the UK’s Competition and Markets Authority (CMA). The investigation was reportedly launched after Facebook failed to make a number of concessions to address competition concerns.

Facebook Acquired Giphy in May 2020 in a $400 million deal with the initial intention of integrating the site into Instagram, according to a report from Axios. The CMA stated on Thursday that it had referred the merger for an in-depth “second phase” investigation with a September 15 deadline.

The CMA began probing the deal in June of last year and launched an initial investigation in January of this year. On March 25, regulators stated that it was possible Facebook’s acquisition of Giphy “has resulted or may be expected to result in a substantial lessening of competition” in UK markets.

Facebook was given five days to offer concessions to address competition concerns but failed to do so. Facebook said in a statement:

We will continue to fully cooperate with the CMA’s investigation.

This merger is good for competition and in the interests of everyone in the U.K. who uses GIPHY and our services — from developers to service providers to content creators.

Regulator’s concerns focus mainly on how Giphy would have less of an incentive to expand its digital advertising following the acquisition leading to a loss of potential competition. In July 2020 the CMA found that Facebook controlled more than 50 percent of the $7.6 billion display advertising market.

The CMA stated that the deal could also harm other social media platforms such as Twitter and TikTok if Giphy stopped supplying GIFs to Facebook’s rival platforms.

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