Facebook’s acquisition of the GIF Giphy site will face an in-depth investigation by antitrust regulators, after the social media giant made no concessions to address competition concerns. Social media giant Facebook FB, + 1.70% acquired Giphy in May 2020 in a deal worth $ 400 million, with the initial intention of integrating the site with Instagram, according to a report by Axios. Giphy allows users to search, create, and share GIFs.
The UK Competition and Markets Authority, or CMA, said on Thursday it had referred the merger for an in-depth “second phase” investigation with a September 15 deadline. Plus: Apple faces a new competition complaint from Epic Games around the world. battle over App Store payments The CMA began investigating the deal in June 2020 and launched an initial investigation in January this year. On March 25, the regulator said Facebook’s acquisition of Giphy “may have resulted or can be expected to result in a substantial decrease in competition” in UK markets. Facebook had five days to offer concessions to address competitive concerns, but chose not to. “We will continue to cooperate fully with the CMA investigation,” Facebook said in a statement. “This merger is good for the competition and in the interest of everyone in the UK who uses GIPHY and our services, from developers to service providers to content creators.” The regulator’s concerns center on how Giphy would have less incentive to expand its digital advertising, leading to a loss of potential competition. In July 2020, the CMA found that Facebook controlled more than 50% of the £ 5.5 billion ($ 7.6 billion) display advertising market. The CMA also said that the deal could damage other social media platforms, such as Twitter TWTR, + 0.93% and Tik Tok, if Giphy stopped supplying GIFs to these Facebook rivals or offered them worse terms. Also read: Facebook, Google, Apple and Amazon could face multi-million dollar fines under new EU tech regulations An in-depth investigation of the CMA comes as Facebook and other tech giants face intense regulatory scrutiny around the world. In addition to the Federal Trade Commission’s lawsuit against Facebook for illegal monopolization, Big Tech will face new regulation in the European Union that includes the possibility of multi-million dollar fines and the dissolution of companies if they do not comply with new rules.