British watchdog could force Facebook to sell gif creator Giphy | Facebook

Gifs are embeddable clips, which are usually no longer than a few seconds. The most popular gif of 2020 was Thanks from Red & Howling, which shows a cartoon dog expressing thanks to essential pandemic workers, which Giphy says has been viewed over a billion times.

The CMA stated in its provisional findings that “our initial view [is] that the only effective way to resolve the competition concerns that we have identified is for Facebook to sell Giphy, in its entirety, to a suitable buyer ”.

The watchdog has discovered that Facebook’s ownership of Giphy, which he aims to integrate with his social media site Instagram, could cause him to stop providing gifs to other social media sites. Or Facebook could require more user data from Giphy’s social media clients to continue to have access to its gifs, thus increasing the company’s already “significant” market power.

“Millions of people share gifs every day with their friends, family and colleagues, and that number continues to grow,” said Stuart McIntosh, chairman of the independent investigative group investigating the deal. “The takeover of Giphy could see Facebook removing the gifs from competing platforms or requiring more user data to access them.”

The watchdog said the deal also removes a potential competitor from the UK’s £ 5.5bn digital display advertising market, where Facebook is the largest player accounting for more than half of the market.

The CMA said Giphy offered paid advertising in the United States with customers including Pepsi and considered expanding the service to countries including the United Kingdom, but Facebook terminated all deals after the take control.

Facebook said in submissions to the inquiry that Giphy, which has no income or staff in the UK, was not in competition with him prior to the merger and Instagram has pledged to continue allowing rivals to access the image library.

“We do not agree with the preliminary findings of the CMA, which we do not believe are supported by evidence,” said a spokesperson for Facebook. “As we have demonstrated, this merger is in the best interests of the 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 agreement hurts competition. “

Although Facebook and Giphy are headquartered in the United States, the CMA has the power to investigate mergers when the acquired company has annual revenues of at least £ 70million or when the combined companies hold at least 25% of the shares of any “reasonable” market. The Facebook-Giphy deal is also under investigation by competition regulators in countries like Australia and Austria.

“Although our investigation showed serious completion issues, these are tentative,” McIntosh said. “We will now consult on our findings before we complete our review. If we conclude that the merger is detrimental to the market and to users of social networks, we will take the necessary measures to ensure the protection of individuals. “

The CMA has the power to force Facebook to sell Giphy, either through pledges or through an order, which can be legally enforced through legal action. The regulator is now seeking answers to its provisional findings and will release its final report by October 6.

The watchdog is setting up a new unit dedicated to digital markets, which will monitor a new enforceable code of conduct to prevent tech giants like Google and Facebook from abusing their power when dealing with some thirds.