UK's CMA says it has provisionally found that Facebook's Giphy acquisition could negatively impact competition, such as by denying competitors access to GIFs
The CMA’s review had already progressed from a formal investigation into the $400M deal to March concerns spanning GIF supply and digital advertising. The provisional finding narrows the issue to whether Facebook’s ownership would make a widely used content supplier less available to rival platforms.
The concern was not theoretical in the subsequent coverage: the CMA later ordered Meta to sell Giphy, citing potential harm to rival platforms, users and UK advertisers. That sequence makes the provisional finding a meaningful enforcement step rather than a routine merger review.
First-order effects
Facebook must address the CMA’s provisional competition concerns, while Giphy’s rival-platform customers face uncertainty over continued access to its GIF library.
The CMA puts Facebook’s control of Giphy’s distribution at the center of its assessment, alongside the earlier advertising-related concerns.
Second-order effects
Social platforms that rely on Giphy gain regulatory backing for their interest in non-discriminatory access, raising the cost to Facebook of restricting or changing that access.
Advertisers become part of the merger calculus because the CMA’s later findings connected the transaction’s effects on platform competition to UK advertising markets.
Third-order effects
The later divestiture order indicates that UK merger enforcement can treat control over an embedded content supplier as a gatekeeping risk, even when the asset is a GIF provider rather than a social network.
If applied consistently, that approach makes acquisitions of shared platform infrastructure harder to defend when a dominant buyer also competes with the infrastructure’s customers.
The trend: Competition authorities are increasingly testing platform acquisitions for whether control of shared inputs can become a means of excluding rivals.
oh noes, something that makes Facebook smaller??!! How will the world survive such a catastrophe as the lopping off of one head of the hydra?🙄 https://twitter.com/...
I'm not sure I fully buy into the first argument (I don't think GIPHY is really a competitive constraint on FB), but the second one seems... kinda reasonable?
Facebook's argument was that GIPHY would become a significantly weakened business had it not been bought by Facebook. This is known as the “failing firm” defence - where the target company is struggling so much that they need to be bought. Umm, sorry FB, people really love GIFs! …
Have a read of our paper (or Dirk's thread) for more on why overeager blocking of deals on “potential competition” grounds may backfire. It does make me worry what the CMA would do with the even more expanded powers it wants. https://www.ft.com/... https://twitter.com/...
🚨🚨New paper w/ @geoffmanne & @s8mb 🚨🚨 Question: Should policymakers do more to prevent killer acquisitions, kill zones and mergers that potentially reduce potential competition? Our answer: The costs of doing so likely outweigh the benefits 👇 https://privpapers.ssrn.com/ ... http…
@bdanks Agree. With @linakhanFTC at the @FTC & @superwuster serving as advisor to the Biden Administration, there's definite momentum in the direction needed. And once the US shifts, others will follow, altho the UK & EU seem to have been tacking this way for a while now.
The CMA has horizontal concerns (FB and GIPHY both provide display advertising), as well as vertical concerns (FB could turn off GIPHY for other social media platforms, such as this hellsite we're currently on).
I fear this kind of move hurts startups. If you build a popular GIF search engine that can't make much money, acquisition is a good way to actually make ££. If those acquisitions are blocked, it's harder to set up and fund a business in the first place. https://www.tenentrepreneu…
Is this a sign that acquisitions by Facebook, Google, etc will no longer get a free pass? The pendulum in antitrust b/w rule-of-reason (ie deference to claims that big is better & M&As good for consumers) vs per se, bright line rules limiting M&A seems 2b swinging towards latter.…
Facebook said it was going to buy Giphy 15 months ago. My understanding was that Giphy was running out of money and the deal was very favorable to Facebook. It hasn't and now may not close cause antitrust. Amazing.
Obviously it's just a summary of provisional findings but some of it is faintly ridiculous. This is from Giphy's own (pre-merger) internal documents - is it *possible* that they might not be the most objective judges of the unique value of GIFs in advertising? https://twitter.com…
Potential competition often “proves too much”. If Facebook faces potential competition from Giphy, then it must also face potential (or actual) competition from Tiktok, Twitter, Youtube, etc, which should make the loss of Giphy's potential competition pretty trivial.
This stood out to me in the CMA provisional findings to block the Facebook/Giphy merger: it describes massive services like Snapchat and Tiktok as FB's rivals, but is concerned about the loss of potential display ad competition from Giphy, which has no display ad business at all?…
“CMA: FACEBOOK'S TAKEOVER OF GIPHY RAISES COMPETITION CONCERNS”. This is epically dumb. Wonder if it says more about the overzealousness of the UK regulator or the increasing problems that $FB & other FANGs will run into in reinvesting their capital purely from antitrust POV
Facebook says the finding lacks evidence. “This merger is in the best interest of people and businesses in the UK - and around the world - who use GIPHY and our services. We will continue to work with the CMA to address the misconception that the deal harms competition.”