The British competition regulator has found that Facebook bought a GIF sharing platform Giphy it will harm competition within social media and digital advertising. As part of his temporary decision, the supervisor expressed concern that Facebook could prevent rivals, including TikTok and Snapchat, from accessing Giphy, a service they already use. It added that Facebook could also require users of the GIF platform to submit more data in exchange for access. If his objections are confirmed as part of an ongoing review, the regulator said it could force Facebook to terminate the deal and sell Giphy in its entirety.
The Competition and Markets Authority (CMA) eventually determined that the agreement would increase Facebook’s significant market power. The suite of apps, including Facebook, WhatsApp and Instagram, together account for 70 percent of social media activity, and at least once a month they are accessed by 80 percent of Internet users, the CMA said.
In addition to social media, the supervisory board would suggest that the purchase could remove a potential challenge to Facebook in the $ 5.5 billion display advertising market. Citing that Facebook terminated Giphy’s partnership with paid ads after the deal, the regulator said the move effectively stopped the spread of the company’s ads (including other countries like the UK). This, in turn, has had an impact on innovation in the wider advertising sector, the CMA explained.
Facebook announced in May last year that it had bought Giphy, with plans to integrate it with Instagram, for $ 400 million which was immediately raised alarm bells for regulators. The social network is facing complaints about the protection of competition in US i ME over its social media and advertising monopolies. At the same time, the UK has stepped up its oversight of Big Tech by creating a dedicated program Digital Markets Unit to monitor Google, Facebook and Apple. The new agency is located within the CMA and is designed to give people more control over their data.
Today, the CMA reiterated these principles in its original decision. The regulator said it would “take the necessary action” to protect users if it concludes the merger is detrimental to competition. They will now consult on their findings as part of the review process. The final decision is scheduled for October 6.
A Facebook spokesman told Engadget to “disagree” with the CMA’s preliminary findings. “We do not agree with the preliminary findings of the CMA, which we believe are not supported by evidence. As we have shown, 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 resolve the misconception that the deal is detrimental to competition. ”
He had previously claimed that Giphy had no operation in the UK, meaning the CMA had no jurisdiction over the deal. In addition, he argued that Giphy’s paid services could not be classified as display advertising according to the regulator’s own market definition.
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