Facebook‘s takeover of GIF website Giphy raises competition concerns, Britain’s Competition and Markets Authority (CMA) said on Thursday.
The regulator’s provisional finding is that the acquisition, unveiled in May 2020, “has resulted or would result in a substantial lessening of competition in social media and display advertising, harming social media users and businesses in the U.K.”
“Facebook completed the acquisition of Giphy on May 15, 2020, but has been required to hold the businesses separate since June 9, 2020, when the CMA imposed an Initial Enforcement Order,” it said in a statement. “In our notice of possible remedies published alongside our provisional findings, we have set out our initial view that the only effective way to address the competition issues that we have identified is for Facebook to sell Giphy, in its entirety, to a suitable buyer.”
Founded in 2013, New York-based Giphy operates a large library of GIFs. Before the deal, Facebook had used Giphy’s application programming interface (API) for several years on Instagram, the Facebook app and WhatsApp. Facebook struck the deal, believed by experts to be worth $400 million, saying it plans to integrate Giphy further “so that people can find just the right way to express themselves.”
Stuart McIntosh, chair of the U.K. regulator’s group performing an in-depth investigation of the deal and its fallout, said: “We will now consult on our findings before completing our review. Should we conclude that the merger is detrimental to the market and social media users, we will take the necessary actions to make sure people are protected.”
Facebook previously said about the deal: “We are prepared to show regulators that this acquisition is positive for consumers, developers and content creators alike.”
This article was originally published by The Hollywood Reporter.