tuesday, 16 june of 2020


UK watchdog opens investigation into Facebook-Giphy acquisition

The UK’s Competition and Markets Authority is investigating Facebook’s $400m acquisition of online image platform Giphy amid concerns over its impact on competition.

The watchdog said that it was considering whether the merger, which was announced last month, "has resulted or may be expected to result in a substantial lessening of competition in any market or markets in the United Kingdom".

In an initial enforcement order, the CMA called for a halt on any integration of the companies’ businesses, such as transfer of ownership or substantive structural changes, except with prior written permission.

A person familiar with the situation said that the merger had been paused while Facebook and Giphy respond to the CMA’s inquiries.

Third parties have until July 3 to provide comment on the deal. Following this period, the CMA will decide whether to move forward to a more formal phase one investigation.

New York-based Giphy, which was last valued at $600m in 2016, maintains a searchable library of short looping videos of everything from memes to animals and celebrities. Facebook planned to integrate the platform into its photo app Instagram, bringing with it reams of data.

The company said in May that it would be able to access Giphy’s API — the programming interface that enables third parties such as Twitter to plug into the system — allowing it to view data such as the volume of requests made by users of other platforms. However, Facebook said it would not access user-specific data.

"Becoming part of Instagram, which has revolutionised self-expression, represents a tremendous opportunity for us to build upon and expand our community’s ability to make and share the creative content they are passionate about," said Giphy, “while also ensuring that everyone will continue to have the same access to Giphy.”

Facebook said: "Giphy improves Instagram’s offerings by giving people more features and tools. Developers and API partners will continue to have the same access to Giphy, and Giphy’s creative community will still be able to create great content. We are prepared to show regulators that this acquisition is positive for consumers, developers, and content creators alike."

The news comes as antitrust concerns have continued to dog technology acquisitions. Yesterday, ticketing sites Viagogo and StubHub received a warning from the CMA that they risked tougher scrutiny if they failed to amend the terms of their $4bn deal.

In 2012, the watchdog's predecessor the Office of Fair Trading scrutinised Facebook's acquisition of Instagram, but concluded that the merger was unlikely to substantially impact competition in the UK. CMA chief executive Andrea Coscelli in March called the acquisitions of WhatsApp and Instagram examples of "merger control gone wrong".

(Published by Financial Times, June 12, 2020)

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