Potential threats to the free flow of GIFs continue to trouble the U.K.\u2019s competition watchdog.<\/p>\n
Facebook\u2019s $400 million purchase<\/a> of Giphy, announced last year, is now facing an in-depth probe by the CMA after the regulator found the acquisition raises competition concerns related to digital advertising. It now has until September 15 to investigate and report.<\/p>\n The watchdog took a first look at the deal last summer<\/a>. It kept on looking into 2021<\/a>. And then last week the CMA laid out\u00a0<\/a>its concerns \u2014 saying the (already completed) Facebook-Giphy acquisition could further reduce competition in the digital advertising market where the former is already a kingpin player (with over 50% share of the display advertising market).<\/p>\n The regulator said it had found evidence that, prior to the acquisition, Giphy had planned to expand its own digital advertising partnerships to other countries, including the U.K.<\/p>\n \u201cIf Giphy and Facebook remain merged, Giphy could have less incentive to expand its digital advertising, leading to a loss of potential competition in this market,\u201d it wrote a week ago.<\/p>\n The CMA also said it was worried a Facebook-owned Giphy could harm social media rivals were the tech giant to squeeze the supply of animated pixels to others \u2014 or require rivals to sign up to worse terms (such as forcing them to hand over user data that it might then use to further fuel its ad targeting engines, gaining yet more market power).<\/p>\n On March 25 the companies were given five days by the regulator to address its concerns \u2014 by offering legally binding proposals intended to allay concerns.<\/p>\n An in-depth \u201cphase 2\u201d investigation could have been avoided if concessions were offered that were acceptable to the regulator but that is evidently not the case as the CMA has announced the phase 2 referral<\/a> today. Given the announcement has come just five working days after the last notification it appears no concessions were offered.<\/p>\n We\u2019ve reached out to Facebook and the CMA for comment.<\/p>\n A Facebook spokesperson said: \u201cWe will continue to fully cooperate with the CMA\u2019s investigation. This merger is good for competition and in the interests of everyone in the U.K. who uses Giphy and our services \u2014 from developers to service providers to content creators.\u201d<\/p>\n While Facebook has already completed its acquisition of Giphy, the CMA\u2019s investigation continues to put a freeze on its ability to integrate Giphy more deeply into its wider business empire.<\/p>\n Albeit, given Facebook\u2019s dominant position in the digital advertising space, its business need to move fast via product innovation is a lot less pressing than years past \u2014 when it was building its market dominance free from regulatory intervention.<\/p>\n In recent years<\/a>, the CMA has been paying close mind to the digital ad market<\/a>. Back in 2019 it reported<\/a> substantial concerns over the power of the adtech duopoly, Google and Facebook. Although in its final report it said it would wait for the government to legislate, rather than make an intervention to address market power imbalances itself.<\/p>\n The U.K. is now in the process of setting up a pro-competition regulator with a dedicated focus on big tech<\/a> \u2014 in response to concerns about the \u201cwinner takes all\u201d dynamics seen in digital markets. This incoming Digital Market Unit will oversee a \u201cpro-competition\u201d regime for internet platforms that will see fresh compliance requirements in the coming years.<\/p>\n In the meanwhile, the CMA continues to scrutinize tech deals and strategic changes \u2014 including recently opening a probe<\/a> of Google\u2019s plan to depreciate support for third-party cookies in Chrome after complaints from other industry players.<\/p>\n In January<\/a> it also announced it was taking a look at Uber\u2019s plan to acquire Autocab. However on Monday<\/a> it cleared that deal, finding only \u201climited indirect\u201d competition between the pair and not finding evidence to indicate Autocab was likely to become a significant and more direct competitor to Uber in the future.<\/p>\n The regulator also considered whether Autocab and Uber could seek to put Autocab\u2019s taxi company customers that compete against Uber at a disadvantage by reducing the quality of the booking and dispatch software sold to them, or by forcing them to pass data to Uber. But its phase 1 probe found other credible software suppliers and referral networks that the CMA said these taxi companies could switch to if Uber were to act in such a way \u2014 leading to it to clear the deal.<\/p>\n Understanding Europe\u2019s big push to rewrite the digital rulebook<\/a><\/p>\n<\/blockquote>\n\n\n
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