The Competition and Markets Authority has provisionally found Facebook’s merger with Giphy will harm competition between social media platforms and remove a potential challenger in the display advertising market.
CMA stated: The merger brings together Facebook, the largest provider of social media sites and displays advertising in the UK, with Giphy, the largest provider of GIFs. If the Competition and Markets Authority’s competition concerns are ultimately confirmed, it could require Facebook to unwind the deal and sell off Giphy in its entirety.
The CMA also stated: This is particularly concerning given Facebook’s existing market power in display advertising – as part of its assessment, the CMA found that Facebook had a share of around 50% of the £5.5 billion display advertising market in the UK.
Stuart McIntosh, chair of the independent inquiry group carrying out the phase 2 investigation, said:
“Millions of people share GIFs every day with friends, family and colleagues, and this number continues to grow. Giphy’s takeover could see Facebook withdrawing GIFs from competing platforms or requiring more user data in order to access them. It also removes a potential challenger to Facebook in the £5.5 billion display advertising market. None of this would be good news for customers.
“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.”
Variety reported that the deal between Facebook and Giphy was announced in May of 2020, and is valued at $400 million.
A Facebook spokesperson told Variety “We disagree with the CMA’s preliminary findings, which we do not believe to be supported by the evidence. As we have demonstrated, this merger is in the best interests of people and businesses in the U.K. – 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.”
That’s a typical response from Facebook every time it is called out on its terrible actions.
Variety reported that that Giphy currently has no employees, revenue, or assets in the UK, meaning that the CMA has no jurisdiction over the deal. The merger is also being assessed by other competition authorities in the UK.