Facebook Giphy Deal Under Scanner Of Multiple Government

Must Read

Facebook Inc. (NASDAQ: FB) brush with the law has become so very frequent over the past few years that it is no longer surprising to most people. In recent news, it has been found out that the social media behemoth has once again managed to land itself in trouble over its plan to acquire the popular animated picture platform Giphy.

On Friday, it was announced that The Competition and Markets Authority aka CMA, amid the fears that it could reduce the competition in the U.K., has begun investigating Facebook’s acquisition of Giphy which has been valued at a whopping $400 million.

As of now, CMA has issued an ‘Initial Enforcement Order’ which has put a halt to all the immediate plans of both companies related to the acquisition. As a result, there can be no transference of staff between both the companies right now. Also, neither can Facebook’s products be allowed to integrate Giphy’s technology. Additionally, if these conditions are not being complied with then both the companies run the risk of being hit with fines.

Giphy is a platform which has grown to be a central source for highly engaging and shareable content. It was founded in the year in 2013 and was initially just a simple search engine for gifs. Its first major product expansion was an extension that happened to allow sharing of gifs via Facebook after which it quickly added Twitter as a second integration. According to the latest data from Crunchbase, Giphy had raised a whopping $150.9 million across five rounds, backed by investors which include DFJ Growth, Lightspeed Venture Partners, Betaworks, GV, Lerer Hippeau, DFJ Growth and more.

Currently, its animated response gifs are available across all the Facebook-owned platforms, as well as through other social apps and services on the web. After the proposed acquisition it is all set to become a part of the Instagram team. That being said, people will still be able to upload their own GIFs on the platform as Facebook has mentioned that they intend to continue to operating Giphy under its own branding and offer integration to outside developers as well.

The social media giant has also reportedly said that they will provide additional tech development for Giphy as more than 50% of traffic that the platform receives already comes from Facebook’s apps which includes Instagram, Messenger, the FB app itself and WhatsApp.

Facebook and Giphy are both are currently headquartered in the U.S. but the CMA can investigate mergers when the business that is being acquired has an annual turnover of $88 million or when the combined businesses have at least a 25% share of any ‘reasonable’ market. 

The competition watchdog of U.K has said the probe will assess whether the deal will “result in a substantial lessening of competition within any market or markets in the United Kingdom.”

When asked to comment on this recent development, a Facebook spokesperson tried to downplay the claims that the deal could reduce competition by saying that they are prepared to show the regulators who are currently investigating this acquisition that it is going to be positive for consumers, developers, and content creators alike.

The Facebook Giphy deal is reportedly being investigated by the Australian Competition and Consumer Commission, which started the probe earlier this week.

Giphy: A Data-Rich Acquisition For Facebook

Be it whatever, if this deal goes through, one thing is very clear – Facebook will be the ultimate gatekeeper for all of Giphy’s integrations. This basically means that it will surely be having unprecedented insight into how people tend to use GIFs.

The social media giant, of course, has already addressed this issue by saying that they will not collect information specific to individual people using Giphy’s API. However, doesn’t mean they won’t get their hands on valuable data about usage patterns across the web.

It should also be noted that Facebook has a not-so-positive history of using data-rich acquisitions to learn more about its rivals. In 2013, Facebook happened to acquire a VPN or Virtual Private Network app called Onavo. The company then later used Onavo to gather data about apps such as the messaging platform WhatsApp, which it ended up buying the next year.

Via observing the data from Onavo, Facebook understood that people were sending way more messages a day on WhatsApp than on Facebook Messenger. This then definitely helped them to justify paying $19 billion for the competing app. The Onavo app was shut down just the previous year in 2019 after which it was criticized for using code from it to collect data about minors as young as 13.

Now it remains to be seen what the future holds for this current Facebook Giphy acquisition. Also, it will be quite interesting to find out how does Facebook actually plan to use Giphy if the investigations give it a ‘go green’ signal. We will keep you posted on all future developments. Until then, stay tuned.


Please enter your comment!
Please enter your name here

- Advertisement -

Latest News

Google Invests in Flipkart: Gearing Up for Quick Commerce Battle

Flipkart, India's e-commerce major, secured a $300-$350 million investment from Google, positioning the tech giant as a minor investor....
- Advertisement -

In-Depth: Dprime

The Mad Rush: The Rising Wave of Smartwatches Among Indian Consumers

A few months ago, a 36-year-old named Adam Croft, residing in Flitwick, Bedfordshire, had a startling experience. One evening, he woke up feeling slightly...



More Articles Like This