Facebook Inc (NASDAQ:FB) could have to sell its gif search engine Giphy, as the Competition and Markets Authority (CMA) in the U.K. alleges the acquisition could now harm competition in the online marketing space.
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Unfair Competition
The social network giant bought Giphy for a reported $400m in May last year. Back then, reports BBC, “Facebook said half of Giphy's traffic came from its apps, including WhatsApp and Instagram.”
However, Giphy also provides gifs to rival platforms like TikTok, Snapchat, and Twitter, so the CMA “sent an enforcement order to Facebook, effectively putting a hold on any merging of the companies until its investigation is over.”
After reviewing the acquisition and arriving at preliminary conclusions, the CMA believes Facebook could possibly stop competitors from using the service.
Still, the U.K watchdog is set to analyze the situation before making a final decision, and should its findings be confirmed, it may force Facebook to sell the popular gif engine.
The CMA also said that Facebook “could require Giphy customers, such as TikTok, Twitter, and Snapchat, to provide more user data in order to access Giphy Gifs.”
Since the Giphy acquisition had removed a possible competitor in display advertising, “Such actions could increase Facebook’s market power, which is already significant.”
Facebook Response
The company stated that the findings were not supported by data, further telling BBC News: “We disagree with the CMA's preliminary findings, which we do not believe to be supported by the evidence.”
“As we have demonstrated, this merger is in the best interest of people and businesses in the UK - and around the world - who use Giphy and our services.”
“We will continue to work with the CMA to address the misconception that the deal harms competition.”
Giphy’s enormous collection of looping animations is massively trendy including among Facebook’s rivals.
The Graphics Interchange Format is an image format created in the 1980s to show static and moving images, and they are now massively popular when posting comments on social media.
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