Give Up Giphy: CMA Calls for Facebook to Rescind Giphy Acquisition​

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By Curtley Bale​


The Story

The UK’s competition regulator, the Competition and Markets Authority (CMA), has provisionally called for Facebook to rescind its $400 million acquisition of Giphy. The company is behind the library of millions of GIFs available on platforms such as Facebook, Snapchat and TikTok, and was acquired by Facebook in 2020. The CMA has cited concerns around the removal of competition in the digital advertising market – this market is estimated to be worth around $5.5 billion, with Facebook already controlling around 50% (CMA). The regulator’s full decision is expected to be declared in the autumn, whilst it considers responses from all interested parties.

What It Means For Businesses And Law Firms

This move by the CMA demonstrates its willingness to tackle the largest tech companies, as well as the heightened level of scrutiny it promised after Brexit. Its main concerns centre around Facebook removing a potential competitor from the market, which may have been able to detract from Facebook’s overall market share.

The regulatory body highlighted Giphy’s ability to display adverts for brands on its platforms, something which it does in its US market (Reuters). However, upon completing the deal, Facebook cancelled these advertising contracts - which perhaps were a threat due to their potential to take business away from Facebook.

The CMA was also concerned that Facebook would remove GIFs from other platforms or charge a higher premium for their usage, as well as demand more user data from the likes of Twitter, Snapchat and TikTok to access the GIFs (Financial Times). This might put these platforms at a competitive disadvantage compared to Facebook and its subsidiaries, Instagram and WhatsApp.

If the deal does receive regulatory approval, it will see the UK’s largest social media and digital display advertising company link up with the largest provider of animated images. Facebook believes that, on its own, Giphy has no advertising product or social media network, and as such, would not be able to survive without Facebook’s investment (BBC). The company says it is willing to address the CMA’s concerns before the final decision is published on 6 October 2021.