The Competition and Markets Authority (CMA) has raised concerns over Facebook’s acquisition of the internet’s largest provider of GIFs, Giphy. According to the CMA, the merger could negatively impact competition between social media platforms and also deprive the internet of another advertising player as Giphy was engaged in the ads space until Facebook stopped these operations.
One of the CMA’s two main concerns with the deal is that Facebook’s takeover of Giphy could see it restrict GIFs on the platform from being shared on social media platforms other than Facebook. If Facebook does allow the GIFs to be shared to other platforms, it could attach strings such as requiring access to rival platforms’ user data which it could then go on to use for targeted advertising.
The other concern is that this merger gives Facebook even more control over the digital advertising space. Before the merger, Giphy was offering paid advertising in the United States and was looking into expanding its advertising operations into other markets including the United Kingdom. Had these plans gone ahead, there would have been more competition in the digital ads space, making for a more vibrant ad marketplace. Under the merger agreement, Facebook has terminated Giphy’s paid ad partnerships making its position in ads more monopolistic.
The CMA has been working with other competition bodies in multiple countries to work out what to do on this matter. The CMA says interested parties can submit their responses to the provisional findings by September 2 and their notice of possible remedies by August 25. The submissions will be taken into account as it writes up its final report on the matter which is due by October 6.
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