Facebook may be forced to unwind Giphy acquisition after UK regulators’ finding

Facebook’s acquisition of the animated image search engine Giphy may harm competition and potentially should be unwound, regulators in the United Kingdom said Thursday.

The Competition and Markets Authority (CMA) provisionally found that the takeover would negatively impact competitiveness in the social media market.

“Millions of posts every day on social media sites now include a GIF,” the agency wrote in a blog post. “Any reduction in the choice or quality of these GIFs could significantly affect how people use these sites and whether or not they switch to a different platform, such as Facebook. As most major social media sites that compete with Facebook use Giphy GIFs, and there is only one other large provider of GIFs – Google’s Tenor – these platforms have very little choice.”

The CMA also determined that Facebook and its assets Instagram and WhatsApp may account for over 70 percent of time people spend on social media.

The regulatory body will now accept responses from relevant parties to its early findings before issuing its final report and recommendations by Oct. 6.

A Facebook spokesperson said the company disagrees “with the CMA’s preliminary findings, which we do not believe to be supported by the evidence.”

“As we have demonstrated, this merger is in the best interest of people and businesses in the UK – and around the world – who use GIPHY and our services,” they added in a statement to The Hill.

The social media giant first announced its plans to acquire Giphy in the spring of 2020.

The deal brought quick antitrust scrutiny from regulators all over the world.

Regulators in Australia are conducting their own independent investigation into whether the deal may give Facebook data that strengthens its market power or harms online messaging rivals.

Global integration of Giphy’s services into Facebook products has been paused as the investigations continue.

Lawmakers in the U.S. have pushed for American antitrust regulators to look into the deal as well.

— Updated at 9:58 a.m.