UK regulator may force Facebook to unwind Giphy purchase

Facebook bought Giphy in 2020 for $400m to merge the GIF provider with its Instagram business. The deal combined the biggest social media group in the with the largest supplier of GIFs, which are animated images used to accompany social media posts.

The Competition and Markets Authority said Facebook's ownership of Giphy could lead to it denying other social media platforms access to its GIFs or forcing Giphy customers such as Twitter and TikTok to hand over more data in return. That could increase the market power of a company whose brands, which also include WhatsApp, account for more than 70% of time spent on social media, the regulator said.

The CMA said if its provisional findings are confirmed it could require Facebook to sell Giphy. This would be a rare example of a non-US regulator trying to undo a big technology deal. Scrutiny of Silicon Valley's acquisitions has intensified as authorities have woken up to the power wielded by Facebook, Alphabet, Amazon and other tech giants.

Stuart McIntosh, who chairs the independent inquiry group for the CMA, said: "Millions of people share GIFs every day with friends, family and colleagues, and this number continues to grow. Giphy’s takeover could see Facebook withdrawing GIFs from competing platforms or requiring more user data in order to access them."

He said the deal also removed a potential challenger to Facebook in the £5.5bn display advertising market. The CMA said it was talking to other regulators that were also investigating the Giphy acquisition. It said it would consider responses to its findings and issue a final report due by 6 October.

Facebook said it disagreed with the CMA and that the deal was in the best interests of people and businesses that use Giphy.