The UK’s Competition and Markets Authority wants Facebook to sell Giphy to prevent the Silicon Valley giant from tyrannizing the happiest place on the internet: the land of GIFs.
What with the EU mulling Facebook's acquisition of Kustomer, antitrust prosecutors going after Facebook in the US, and now this issue with Giphy, you may be getting the feeling that regulators are now overcompensating after allowing Mark Zuckerberg to snap up Instagram and WhatsApp all those years ago.
Those acquisitions by Facebook dramatically changed the landscape of social media forever. Now those effects are apparent, suddenly Facebook's latest takeovers are facing higher scrutiny, or so it seems.
Facebook finished absorbing Giphy in May 2020 for about half a billion dollars, though it hasn’t been allowed to integrate the startup's GIF-making tools into its own platform due to an ongoing investigation by Blighty's competition watchdog.
Animated images and stickers may not sound like a big deal. But they are. Everyone uses them still. And if Facebook controls access to Giphy’s vast library of GIFs – and higher-res video copies – it could prevent them from appearing on rival social media networks, making them less competitive.
What’s worse, Facebook could force competitors like TikTok, Twitter, and Snapchat to hand over customer information if they want to continue using GIFs provided by Giphy. That data could then be used to improve Facebook’s targeted advertising service. In 2017, Giphy said it had 250 million monthly active users on its website.
“Millions of people share GIFs every day with friends, family and colleagues, and this number continues to grow,” Stuart McIntosh, inquiry chair at the Competition and Markets Authority, noted in a statement on Thursday.
“Giphy’s takeover could see Facebook withdrawing GIFs from competing platforms or requiring more user data in order to access them. It also removes a potential challenger to Facebook in the £5.5bn display advertising market. None of this would be good news for customers.”
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The “only effective way” to prevent anti-competitive behavior is to get “Facebook to sell Giphy, in its entirety, to a suitable buyer,” according to the regulator’s provisional findings [PDF] from its investigation.
When Facebook snapped up Giphy, it terminated contracts the biz had signed with companies, such as Dunkin’ Donuts and Pepsi, which had hoped to promote their brands through GIFs. The merger allowed the social media giant to effectively kill off a digital advising competitor, the CMA said.
Although it has recommended Facebook sell off Giphy, the conclusions in its report, however, aren’t final. It may come up with other solutions, and is looking for advice from “interested parties” before it issues its final report on October 6.
The Register has contacted Facebook for comment and will update the story if we get a response. ®