Facebook's Giphy merger scrutinized over GIF supply concerns

Giphy (Image credit: Android Central)

What you need to know

  • The UK's Competition and Markets Authority this week expressed concern over Facebook's Giphy merger.
  • It focused on the potential for increased Facebook dominance in both the digital advertising markets, as well as social media.
  • Facebook and Giphy have 5 days to respond to these issues.

Facebook's Giphy merger faces a potential roadblock in the UK. The country's Competition and Markets Authority, or CMA, had begun an investigation into the merger in January. It shared its findings this week, expressing concerns over Facebook's increased hold in the digital advertising markers, as well as the potential for increased dominance in social media.

Everyone uses gifs nowadays on social media. Whether you're on Twitter, or WhatsApp, or Snapchat, or even just using Gboard, the humble gif is only ever just a few taps away. While Giphy isn't the only gif platform around, it is one of the most used. The CMA expressed concerns that Giphy could prioritize Facebook when it comes to Gif supply and make competing apps have to share more user data to get the same terms as before.

The CMA also noted that the Giphy acquisition took Giphy out of the running as one of Facebook's competitors in the digital ads market.

The UK's Andrea Gomes da Silva, Executive Director of Markets and Mergers, said:

Many people use GIFs when they communicate online so it's important that platforms aren't restricted in what they can offer and people have a range of options to pick from.As the UK's competition authority, it is our responsibility to make sure that markets remain competitive. It is vital we ensure that Facebook, as a large and powerful Big Tech firm, isn't using its strong market position to stifle competition.Should the companies fail to address our concerns, we will launch a more in-depth review to ensure consumers and businesses don't lose out.

Both Facebook and Giphy have been given 5 working days to respond to these two concerns with legally binding proposals. If their response is unsatisfactory, or they do not respond, the CMA could refer the merger to a Phase 2 investigation.

A Facebook spokesperson told Reuters the company would cooperate with any investigation, adding:

This merger is good for competition and in the interests of everyone in the UK who uses Giphy and our services — from developers to service providers to content creators.

Michael Allison