The British market regulator CMA will further investigate the acquisition of Giphy by Facebook. According to the authority, the deal could potentially hurt competition between various social media platforms. In extreme cases, the deal can be undone.
In a press release, the authority announced on Thursday that it is investigating the deal and what this means for Facebook’s competitive position. The Competition and Markets Authority is questioning Facebook’s takeover of the GIF provider because it may have major consequences for the advertising market.
According to the CMA, the acquisition may have a negative effect on the advertising market and give Facebook an excessive advantage over other display ad providers. Prior to the acquisition, Giphy offered “innovative advertising capabilities that could compete with Facebook,” the authority said. If the investigation shows that this is indeed the case, the CMA could force Facebook to sell Giphy again.
Facebook would also cause unfair competition with other platforms with Giphy. For example, the company could require services like TikTok, Snapchat or Twitter to give more user data to Facebook if they want to offer Giphy integration, or Facebook could exclude them altogether. This would increase the company’s already significant market share.
In May of this year, it was announced that Facebook had bought the poison platform. The deal is said to be worth $400 million, according to sources. Details about the acquisition were not disclosed. Facebook only announced that the gif library would be integrated into its own platforms.
The UK authority is also in talks with other authorities who are also investigating the deal. The CMA wants to release a final result of its investigation on October 6. Then it should become clear whether Facebook should sell Giphy again.
The authority is currently conducting a similar investigation into the deal between Nvidia and Arm. CMA would like to stop the takeover. In that case, it is not so much a question of competitiveness, but of ‘potential risks to national security’.