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ACCC, UK Regulators, Move To Block Facebook Acquiring Giphy

Facebook’s $400 million acquisition of GIF search engine Giphy is under fire, due to an antitrust investigation by the UK’s Competition and Markets Authority, which follows similar investigations from the ACCC.

The CMA is claiming the deal, which was first announced in May, 2020, would “negatively impact competition” between social media platforms.

“Millions of posts every day on social media sites now include a GIF,” the CMA notes.

“Any reduction in the choice or quality of these GIFs could significantly affect how people use these sites and whether or not they switch to a different platform, such as Facebook. As most major social media sites that compete with Facebook use Giphy GIFs, and there is only one other large provider of GIFs – Google’s Tenor – these platforms have very little choice.

“The CMA provisionally found that Facebook’s ownership of Giphy could lead it to deny other platforms access to its GIFs. Alternatively, it could change the terms of this access – for example, Facebook could require Giphy customers, such as TikTok, Twitter and Snapchat, to provide more user data in order to access Giphy GIFs. Such actions could increase Facebook’s market power, which is already significant.”

Facebook has rejected this idea, writing in a filing that Giphy had “no meaningful audience of its own” and was “reliant on Facebook for a significant proportion of its user traffic.”

“We disagree with the CMA’s preliminary findings, which we do not believe to be supported by the evidence,” a Facebook spokesperson said.

“We will continue to work with the CMA to address the misconception that the deal harms competition.”

ACCC Chair Rod Sims says it is “pleased to see other regulators also increasing their focus and scrutiny of digital platform acquisitions.

“Competition authorities around the world are tackling very similar issues and are increasingly cooperating with each other.

“As previously confirmed, we have also been investigating the effect of Facebook’s completed acquisition of Giphy. Our investigation is continuing and we have not yet come to a conclusion about the potential impact of Facebook’s acquisition of Giphy on competition.

“We recognise the important role Giphy plays in social media and instant messaging.

“Facebook did not notify any competition authorities before completing its acquisition of Giphy in May 2020.

“Given Facebook’s dominant position in various markets, this is an example of a transaction we would want to know about and have the opportunity to review well before the transaction is completed.

“The ACCC is currently considering whether Australia’s existing merger laws are fit for purpose in current market conditions, and we will have more to say on this soon.”

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