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UK Competition & Markets Authority Goes After .GIFs On Facebook

Mon Aug 16 2021

The UK CMA regulator is reviewing Facebooks acquisition of Giphy last year

The UK CMA (Competition and Markets Authority) has been reviewing Facebooks $400m acquisition of Giphy and could force them to unwind the merger.

The CMA are concerned that “Facebook's merger with Giphy will harm competition between social media platforms and remove a potential challenger in the display advertising market.”

 

Facebook is the UK’s largest provider of display advertising at around a 50% market share but the CMA are concerned as Giphy is the UK’s most-used GIF platform, with its only competitor being Google Tenor.

 

Before its merger with Facebook last year, Giphy had just launched its own display adverting business in the US and were considering expanding into the UK market… creating another challenger to Facebooks market share here.

Since the merger, Facebook has shut down all of Giphys paid advertising partnerships.

 

In a statement, the CMA have noted that millions of GIFs are used on a daily basis in the UK. Any reduction in quality or choice of that option on different platforms could drive users to Facebook instead.

Whilst Facebook currently haven’t said they’d be limiting Giphy to Facebook only, the potential does always exist that they could in the future. They could also make the terms of posting .GIFs more restrictive… making users give up more personal information if they wanted to keep using them.

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While our investigation has shown serious competition concerns, these are provisional. We will now consult on our findings before completing our review. Should we conclude that the merger is detrimental to the market and social media users, we will take the necessary actions to make sure people are protected.

Stuart McIntosh - Chair of the Independent Inquiry Group, phase two investigation

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What’s unusual about the CMA’s investigation is that regulatory bodies almost never look at mergers that have taken place in foreign countries (in this case the US). However, should the investigation uncover valid concerns it could still force Facebook to unwind the acquisition.

 

In response, Facebook have said:

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As we have demonstrated, this merger is in the best interest of people and businesses in the UK - and around the world - who use Giphy and our services. We will continue to work with the CMA to address the misconception that the deal harms competition. Giphy doesn't directly compete with our existing services, with no social media network, display advertising business or 'meaningful audience' of its own

Facebook Statement

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Mon Aug 16 2021

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