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.

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."

Similar topics


Other stories you might like

  • Prisons transcribe private phone calls with inmates using speech-to-text AI

    Plus: A drug designed by machine learning algorithms to treat liver disease reaches human clinical trials and more

    In brief Prisons around the US are installing AI speech-to-text models to automatically transcribe conversations with inmates during their phone calls.

    A series of contracts and emails from eight different states revealed how Verus, an AI application developed by LEO Technologies and based on a speech-to-text system offered by Amazon, was used to eavesdrop on prisoners’ phone calls.

    In a sales pitch, LEO’s CEO James Sexton told officials working for a jail in Cook County, Illinois, that one of its customers in Calhoun County, Alabama, uses the software to protect prisons from getting sued, according to an investigation by the Thomson Reuters Foundation.

    Continue reading
  • Battlefield 2042: Please don't be the death knell of the franchise, please don't be the death knell of the franchise

    Another terrible launch, but DICE is already working on improvements

    The RPG Greetings, traveller, and welcome back to The Register Plays Games, our monthly gaming column. Since the last edition on New World, we hit level cap and the "endgame". Around this time, item duping exploits became rife and every attempt Amazon Games made to fix it just broke something else. The post-level 60 "watermark" system for gear drops is also infuriating and tedious, but not something we were able to address in the column. So bear these things in mind if you were ever tempted. On that note, it's time to look at another newly released shit show – Battlefield 2042.

    I wanted to love Battlefield 2042, I really did. After the bum note of the first-person shooter (FPS) franchise's return to Second World War theatres with Battlefield V (2018), I stupidly assumed the next entry from EA-owned Swedish developer DICE would be a return to form. I was wrong.

    The multiplayer military FPS market is dominated by two forces: Activision's Call of Duty (COD) series and EA's Battlefield. Fans of each franchise are loyal to the point of zealotry with little crossover between player bases. Here's where I stand: COD jumped the shark with Modern Warfare 2 in 2009. It's flip-flopped from WW2 to present-day combat and back again, tried sci-fi, and even the Battle Royale trend with the free-to-play Call of Duty: Warzone (2020), which has been thoroughly ruined by hackers and developer inaction.

    Continue reading
  • American diplomats' iPhones reportedly compromised by NSO Group intrusion software

    Reuters claims nine State Department employees outside the US had their devices hacked

    The Apple iPhones of at least nine US State Department officials were compromised by an unidentified entity using NSO Group's Pegasus spyware, according to a report published Friday by Reuters.

    NSO Group in an email to The Register said it has blocked an unnamed customers' access to its system upon receiving an inquiry about the incident but has yet to confirm whether its software was involved.

    "Once the inquiry was received, and before any investigation under our compliance policy, we have decided to immediately terminate relevant customers’ access to the system, due to the severity of the allegations," an NSO spokesperson told The Register in an email. "To this point, we haven’t received any information nor the phone numbers, nor any indication that NSO’s tools were used in this case."

    Continue reading

Biting the hand that feeds IT © 1998–2021