Facebook’s takeover of Giphy will face an in-depth competition probe in the UK after the social media giant declined to offer remedies to the regulator’s concerns.
The Competition and Market Authority (CMA) last week gave the companies five days to address worries that their deal could harm the digital advertising market and the supply of Gifs.
But the watchdog today said Facebook had declined to do so and it would therefore refer the case to an in-depth investigation.
Following an initial investigation, the regulator found that Giphy previously competed with Facebook outside the UK in digital advertising through partnerships with brands such as Pepsi and Dunkin’ Donuts, and had planned to expand to other countries, including the UK.
But it warned that the merger could reduce Giphy’s incentive to expand its digital advertising, leading to a loss of competition in the market, in which Facebook already has more than a 50 per cent share.
The CMA also found that the deal could harm rival social media platforms as it could cause Giphy to offer worse terms to Facebook’s rivals or even stop supplying them completely. Facebook is planning to merge the gif-maker with Instagram.
Facebook has said it will cooperate with the investigation, adding: “This merger is good for competition and in the interests of everyone in the UK who uses Giphy and our services — from developers to service providers to content creators.”