The UK competition regulator has announced that Facebook 's acquisition of popular GIF website Giphy is raising competition concerns.
The Competition and Markets Authority said it had provisionally found that Facebook's purchase of Giphy harmed competition among social media platforms. It eliminates a potential competitor in the display advertising market.
The regulator added that it may ask the social media giant to cancel the deal, which was said to be worth $400 million, and sell Giphy if competition concerns are confirmed.
This is the latest sign that the UK regulator is not satisfied with the power wielded by tech giants in Silicon Valley. It is also a rare example of an offshore regulator looking to resolve a deal involving two US companies.
Millions of gifs are shared on social networking sites such as Twitter, Snapchat and Tik Tok. As well as via email and text messages.
Most social media platforms rely on access to Giphy's database of motion pictures. While some also come from Google's Tenor.
The agency said that Facebook's ownership of Giphy could lead it to block other platforms from accessing its GIFs.
She added that any reduction in the quality or selection of motion pictures could affect how people use social media and whether or not they switch to a different platform.
Facebook platforms account for more than 70 percent of the time people spend on social media.
The head of the independent investigative group that is carrying out the final stage of the investigation said that Facebook may pull gifs from competing platforms or require users to hand over more data in order to access them.
"The deal also removes a potential competitor to the company in the £5.5 billion display advertising market," he added.
Facebook's acquisition of Giphy raises concerns
While the investigation showed serious concerns about competition. But these concerns are temporary. The Committee consults on its findings before completing its review.
If it concludes that the merger harms the market and social media users, it takes the necessary measures to ensure that people are protected.
Facebook and Giphy are headquartered in the United States. But the UK regulator can investigate mergers when the acquired company has an annual turnover of at least 70 million pounds ($88 million), or when the combined companies have at least a 25 percent share of any reasonable market.
A Facebook spokesperson said the company did not agree with the commission's preliminary findings. And as we have made clear, this merger is in the interest of individuals and companies in the UK and around the world who use GIPHY and services. We continue to work with the authority to address the misconception that the transaction is detrimental to competition.
At the time of the acquisition, the company said it planned to further integrate Giphy into the Instagram platform so that people could find the right way to express themselves.
The company previously tried to play down claims that the deal could reduce competition. And a spokesman in the month of May 2020 , said: Developers and partners will continue to receive the same access to Giphy. Giphy's creative community is still able to create content. And we are ready to show the organizers that this is a positive acquisition for consumers, developers and content makers alike.