- Facebook’s $400 million acquisition of the popular GIF site Giphy is under scrutiny by the UK’s competition authority.
- The Competition and Markets Authority on Friday issued an initial enforcement order, which means the two companies must remain separate while it conducts its initial investigation.
- Australia is also probing the deal.
- Facebook had earlier shot back at concerns that it was buying Giphy in order to access more data about people’s habits.
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Facebook’s $400 million acquisition of popular GIF site Giphy is being probed by the UK’s competition watchdog.
Facebook announced it was buying Giphy, a searchable library of shareable images, in May. The company said Giphy will be folded into the team at Facebook-owned Instagram and its vast library of GIFs will continue to operate separately.
The UK’s Competition and Markets Authority on Friday said it had issued an initial enforcement order, which essentially stops the two companies from integrating while the watchdog conducts its initial investigation. As yet, the CMA hasn’t determined whether it will conduct an in-depth probe.
While both Giphy and Facebook are US businesses, the CMA can investigate cases where the firm being bought makes £70 million or more in UK revenue, or where the combined businesses boast a combined UK market share of at least 25%.
In its update, the CMA didn’t say why it was probing the deal other than the fact it had competition concerns, though those concerns may hinge on Facebook’s increased access to user data.
A Facebook spokesman told Business Insider: “GIPHY improves Instagram’s offerings by giving people more features and tools.
“Developers and API partners will continue to have the same access to GIPHY, and GIPHY’s creative community will still be able to create great content. We are prepared to show regulators that this acquisition is positive for consumers, developers, and content creators alike.”
At the time of the acquisition, there was speculation that buying Giphy would give Facebook a new lens on what services were popular with users. Since Giphy integrates with services such as Twitter, TikTok, and Slack, theoretically Facebook could gain further insight into how its rivals are being used.
But Facebook executive Adam Mosseri, the self-described “sponsor” of the deal, said at the time that data “was not the motivation.”
—Adam Mosseri 😷 (@mosseri) May 18, 2020
He said : “Yes, data is valuable, but GIPHY has little user data. The API, which comprises the vast majority of usage as you say, includes an optional ID which can be anything. APIs have access to IPs in general, but most major platforms, ourselves included, proxy via a server side call.
He continued: “The data about competitors is also limited to how often people search for GIFs and what they search for, and developers can easily manipulate the API calls they make.”
The CMA probe comes after Australia also announced it would investigate the deal this week.