UK’s watchdog says Facebook acquisition of Giphy raises competition concerns

Regulators in the United Kingdom announced Thursday that Facebook’s acquisition of animated image search engine Giphy raises competition concerns.

The Competition and Markets Authority (CMA) had first announced that it would be looking into the move in July.

In a statement Thursday, the regulatory agency said that Giphy had previously competed with Facebook in digital advertising via paid brand partnerships.

The CMA said that if the merger remains in place, Giphy may have “less incentive” to expand its digital marketing, thus lessening competition in that market.

The agency also found that the deal could ultimately harm Facebook’s rivals if Giphy chose to stop providing GIFs to other social media platforms or require they provide more data to use the search engine.

“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,” Andre Gomes da Silva, the executive director of markets and mergers at the CMA, said.

The agency is requesting that Facebook and Giphy offer “legally binding proposals” to address the outlined concerns within the next five business days.

“We will continue to fully cooperate with the CMA’s investigation,” a Facebook spokesperson told The Hill. “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.”

The CMA will then either accept a potential offer or refer the case to a second investigation.

Regulators in Australia are conducting their own independent investigation into whether the deal may give Facebook data that strengthens its market power or harms online messaging rivals.

Global integration of Giphy’s services into Facebook products has been paused as the investigations continue.

Lawmakers in the U.S. have pushed for American antitrust regulators to look into the deal as well.