Facebook, Giphy Tech Tie-Up Falls Foul of U.K. Regulator (1)

Facebook Inc.’s takeover of Giphy will harm the competition for display advertising in U.K. and social media, the U.K.’s antitrust watchdog has provisionally found, adding to a string of regulatory headaches for the Silicon Valley giant.

The watchdog has taken an initial view that “the only effective way to address the competition issues,” is for Facebook to sell Giphy “in its entirety, to a suitable buyer,” the Competition and Markets Authority said in a note published Thursday. It has set a Sept. 2 deadline for feedback on its provisional findings.

The $400 million deal for Giphy, announced last year, ...