Facebook acquired Giphy for about $ 400 million. This platform was used to host GIFs so that through APIs they could be integrated into other social networks and spaces on the Internet. This caused that, for example, GIFs reached Instagram. However, this movement was in the crosshairs of the CMA, and now the body asks Facebook to sell its recent acquisition.
The privacy debate was reopened with the purchase of Giphy by Facebook, and since it is integrated into a myriad of applications of daily use by many users, the company would have an advantage over the race to collect our data. However, this has not been the reason why the CMA (Competition & Markets Authority) asks the social network to sell Giphy.
An advantageous acquisition for Facebook
According to an official statement on the UK government website, this deal could “harm social media users and advertisers in the UK”. The regulatory body concludes that the acquisition of Giphy by the now renamed ‘Meta’, would reduce competition between social networks, increasing the market power of the company, which is already colossal.
The points on which the CMA relies for this ‘increase in power’ over other social networks are the limitation or denial of access to Giphy to other platforms, or changing the terms of access to this tool. Both assumptions could happen if Facebook wanted, and that is the main problem with this question.
Another of the great points of the investigation that have led to this conclusion by the CMA, is that Giphy’s advertising power had the potential to compete with Facebook’s own, enabling companies such as Pepsi or Dunkin ‘Donuts to promote their brands through images and GIFs in innovative ways. Facebook thus got rid of that competition through an acquisition.
According to the CMA, Facebook controls almost half of the 7 billion pounds invested in advertising in the UK. That is why the only solution that this body sees in the face of this fact is the sale of Giphy by Facebook.
The ball is now on the roof of Facebook, or ‘Goal’, so we will have to wait to find out how the giant solves this obstacle to continue counting on Giphy.
More information | UK Government