Search 'middle finger' on Giphy: Basically Facebook's response to UK competition concerns over merger

'Fundamental errors' in CMA's findings, claims The Social Network


Updated Facebook has hit back at the UK's regulatory challenge to its decision to buy gif slinger Giphy, claiming the provisional findings by the competition watchdog are based on "fundamental errors."

The tech giant's no-nonsense response was sent to the Competition and Market's Authority (CMA) last month but has only just been made public [PDF].

It follows publication of the CMA's findings in August which claimed Facebook's merger with Giphy would "harm competition between social media platforms and remove a potential challenger in the display advertising market."

If the CMA gets its way, it could force Facebook to unwind the deal and sell Giphy.

Last month, we reported how Facebook had already 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 because of the ongoing investigation by the CMA.

Now, as the deadline for the CMA's final ruling nears, Facebook has hit back saying that the watchdog has applied the "wrong legal test" and that the CMA's provisional decision contained "fundamental errors."

Throughout the 14-page document, Facebook questions the assumption made by the UK watchdog before laying out its reasons for unpicking its legal arguments, including describing concerns that the merger would damage competition in display advertising as "erroneous."

It also reveals that in March, Facebook "informally offered… commitments to the CMA, which the CMA rejected," including the promise to "maintain existing and new API Users' access to GIPHY's library for five years."

Wrapping up, it went on to say that the deal has "no material nexus to the UK" and that Giphy is a "US-based business with no UK assets, employees, revenues, or customers."

"The transaction is therefore based on nothing more than the unremarkable fact that people in the UK can access the internet," it said.

In a statement, a CMA spokesperson told us: "The CMA provisionally found that Facebook's merger with Giphy will harm competition between social media platforms and remove a potential challenger in the display advertising market.

"Our preliminary view was that full divestiture of GIPHY would represent a comprehensive and effective remedy. However, we will consider any behavioural remedies put forward as part of our consultation."

The CMA's final ruling* is expected early in October. ®

Updated at 12:57 on 10 September 2021 to add:

* The deadline for final ruling has been pushed back to December, The Reg was told.

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