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Facebook fined £50m in UK for 'conscious' refusal to report info and 'deliberate failure to comply' during Giphy acquisition probe
That rebrand can't come soon enough
Updated The UK's Competition and Markets Authority (CMA) has smacked Facebook with a £50m ($68.7m) fine for "deliberately" not giving it the full picture about its ongoing $400m acquisition of gif-slinger Giphy.
The move – fingered by the CMA as a "major breach" – comes just weeks after the antisocial network dismissed the UK's regulator's initial findings as being based on "fundamental errors" and just hours after the US Dept of Justice and its Department of Labor announced separate agreements with the firm in which it will fork over $14.25m to settle allegations of discriminatory hiring practices.
Facebook first announced its intention to buy the image platform, which hosts a searchable database of short looping soundless animated GIFs – many of which are sourced from reality TV and films – in May last year. Giphy also hosts MP4 looped video clips (so users can "enjoy" audio), which it also unaccountably calls gifs. Pinterest, Reddit and Salesforce's comms firm Slack have all integrated Giphy into their platforms so you can "react" to friends and colleagues. Facebook's acquisition values the company at $400m.
By June 2020, the British competition body had imposed an Initial Enforcement Order (IEO) preventing the deal from going through until the CMA had had a look. Later that month, Facebook's London-based legal advisers, Latham & Watkins, wrote to the CMA complaining it had adopted "an unreasonable and disproportionate approach", and asking the body to change the order's terms because (or so it claimed) the IEO was "an unreasonable compliance burden" for a global business.
A Competition Appeal Tribunal heard arguments in late October 2020 [PDF] and denied the American firm's request, saying Facebook had no grounds for overturning the IEO.
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The anti-social network had already failed to neutralise an order from Britain's competition regulator freezing its buyout of the image platform after it "sat on its hands" and failed to answer prior questions, a UK Court of Appeal found in May.
Facebook has form in copping an attitude with UK attempts to regulate it: CEO Mark Zuckerberg famously declined several times to come to the UK to give evidence to British MPs as part of their inquiry into social media and the spread of fake news in the wake of the Cambridge Analytica scandal in 2018.
The CMA said of the £50m fine today:
This is the first time a company has been found by the CMA to have breached an IEO by consciously refusing to report all the required information. Given the multiple warnings it gave Facebook, the CMA considers that Facebook's failure to comply was deliberate. As a result, the CMA has issued a fine of £50 million for this major breach, which fundamentally undermined its ability to prevent, monitor and put right any issues.
Bear in mind, Facebook made a $29bn, or £21bn, profit in 2020, so that fine is a fraction of one per cent of the US giant's annual net income.
Joel Bamford, senior director of Mergers at the CMA, said: "Initial enforcement orders are a key part of the UK's voluntary merger control regime."
Bamford said companies were not required to seek the CMA's approval before they completed an acquisition but noted that "if they decide to go ahead with a merger, we can stop the companies from integrating further if we think consumers might be affected and an investigation is needed."
He added: "We warned Facebook that its refusal to provide us with important information was a breach of the order but, even after losing its appeal in two separate courts, Facebook continued to disregard its legal obligations.
"This should serve as a warning to any company that thinks it is above the law."
It's almost like somebody at the CMA read The Register's headline, isn't it, readers?
You can vote in our poll with your thoughts on what Facebook should call itself after its rumoured rebrand here. ®
Updated to add at 1455 UTC
A Facebook company spokesperson has been in touch to say: "We strongly disagree with the CMA's unfair decision to punish Facebook for a best effort compliance approach, which the CMA itself ultimately approved. We will review the CMA's decision and consider our options."