This article is more than 1 year old

UK regulator 'broke international law', says Facebook

From the people who 'sat on their hands' when asked for info about Giphy deal

Facebook claimed in court today that Britain's Competition and Markets Authority (CMA) broke international law when it blocked the ad company's $400m buyout of Giphy.

Facebook tried to acquire the animated images provider in May 2020 for $400m. The UK competition body, the CMA, stepped in last year to block the deal after concluding it would lead to a substantial lessening of competition in the digital display advertising market.

Pinterest, Reddit and Salesforce's comms firm Slack all use the "reaction" images on their platforms, and Facebook's acquisition values the company at $400m.

Facebook so far hasn't been allowed to integrate the startup's GIF-making tools into its own platform because of the ongoing investigation – and will have to unwind the deal and sell off Giphy if the CMA's competition concerns are ultimately confirmed.

Earlier this year the social networking site filed its formal legal bid against November's CMA order to sell the Giphy business.

Today, a barrister for Facebook told Competition Appeal Tribunal (CAT) judges that "the adverse impact on competition in the UK was at best speculative," adding that there was "global concern" about the CMA blocking the merger.

Mr Justice Marcus Smith heard the eyebrow-raising accusation from Facebook's holding company Meta at a hearing in case between the social network firm and the regulator brought over the stalled Giphy buyout.

"The legal points we're raising are that the CMA misdirected itself on international law and exercised its jurisdiction in breach of international law," continued Meta's counsel.

The case will doubtless attract global attention with such high-profile claims being thrown around in the courtroom.

Responding, Tristan Jones for the CMA told Mr Justice Marcus Smith: "When submissions like these are made, the tribunal has to go through them very carefully to determine if they are relevant and admissible to the arguments being run."

That attention has already crossed some international boundaries. Attempting to intervene in the case are: Privacy International; the US-based Computer and Communications Industry Association; and the Application Developers' Alliance. A full hearing of the issues is scheduled for next month.

Facebook has been repeatedly fined by the CMA for failing to cooperate with the British authorities. Last year, it was fined £50m for what regulators called a "conscious" refusal to report information and a "deliberate failure to comply" during the Giphy acquisition probe. Most recently, in January, it received what many considered to be a token £1.5m fine (0.005 per cent of its annual profits) and slap on the wrist for failing to notify the CMA that key staff had quit and their jobs had been filled.

At the time a CMA spokesman told The Register that Facebook's inaction breached the terms of an initial enforcement order (IEO) issued to put the buyout on ice – and to preserve Giphy as a standalone business.

A Court of Appeal attempt to get the IEO thrown out failed because Facebook had "sat on its hands," senior judges later ruled.

The CAT case continues. Giphy must, legally, remain a separate business entity from Facebook until the appeal is resolved one way or another. ®

More about


Send us news

Other stories you might like