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, raised concerns from U.K. regulators from the beginning. The antitrust probe was initially delayed after officials ordered Facebook to pause plans to integrate the company, sparking a lengthy court battle. The big tech firm is already facing multiple probes in the European Union and beyond over its data use and advertising.

“We disagree with the CMA’s preliminary findings, which we do not believe to be supported by the evidence,” a Facebook spokesperson said. “As we have demonstrated, this merger is in the best interest of people and businesses in the U.K. -- and around the world.”

The cases open up yet another front for the world’s biggest tech firms to fight on, The European Union and Germany are already investigating Facebook’s use of personal data while the CMA is looking at its Marketplace and Dating services

Facebook Data Trove Probed as Europe Turns Screw on Big Tech

Merger watchdogs across Europe are giving U.S. tech giants a much tougher time as they investigate their market power during a pandemic when online commerce and advertising has become far more important to people working from home.

Regulators faced a barrage of criticism for allowing Silicon Valley to snap up potential rivals before they make it big. Facebook’s game-changing takeover of photo cite Instagram is often cited as a deal that was waved through by regulators without proper scrutiny.

CMA officials have voiced regret for waving through such deals. CMA Chief Executive Officer, Andrea Coscelli, previously said that the largest tech companies should face scrutiny for any transaction, no matter how small.

Giphy’s business lets users attach animated images known as GIFs to messages. While half of Giphy’s business involved Facebook and its apps, the company also provided the same search service to competitors such as Apple Inc.’s iMessage, Twitter Inc., Signal, and TikTok.

(Updates with with details from second paragraph)

--With assistance from Stephanie Bodoni.

To contact the reporter on this story:
Katharine Gemmell in London at kgemmell2@bloomberg.net

To contact the editors responsible for this story:
Tina Davis at tinadavis@bloomberg.net

Jeremy Hodges

© 2022 Bloomberg L.P. All rights reserved. Used with permission.