After a careful inquiry which could finally become an important test of its international fire power, the CMA identified a number of concerns about this merger.
After a UK Competition Regulator investigation has concluded it could undermine the choice of social media and advertising markets, Facebook may be compelled to sell GIPhy library.
In April, after raising a number of concerns, the Competition and Markets Authority (CMA) initiated a comprehensive inquiry into the arrangement.
They showed Giphy, a platform for producing and sharing animated images known as GIFs, had plans for expanding its digital advertising relationships in the UK before it was acquired which led to a possible loss of competition.
In May last year, Facebook purchased the US startup for integration with its Instagram photo sharing app.
But on Thursday Stuart McIntosh, head of the investigative team for CMA, said: “Facebook could be able to view the Giphy takeover by removing GIFs from other platforms or by requiring more user data to access them.
He continued, “It also takes away Facebook’s prospective opponent.”
The declaration of the CMA said: “The merger brings together the largest social media provider in the UK, Facebook, and Giphy, the largest provider of GIF’s.
“If eventually verified CMA competition issues, Facebook may need to retire and sell all of Giphy.” ”
“The CMA found that Giphy’s owning of Facebook might lead to other sites denying access to its GIFs. The decision continues. The decision:
“An alternative may be to amend the terms of this access – for example, Facebook may require the provision of more user information to Giphy customers such as TikTok, Twitter, Snapchat, to access Giphy GIFs. Such acts could expand the already substantial commercial influence of Facebook.
“Analysis from the CMA shows that over 70% of people spend on social media and at least once a month are accessed by 80% of all Internet users through the platforms on Facebook, whatsApp and Instagram.”
Facebook was found to have a 50% share of the UK advertising industry of £5.5bn.
Although the two companies are registered in the United States, the CMA has the power to investigate fusions where its acquisition is at least £70 million in annual revenue, or if the combined enterprise has at least 25% of any ‘reasonable’ market.
The CMA stated that, by 25 August 2014 and by 2 September, it had invited interested parties to comment on alternative solutions.
A Facebook spokesman said: “We are not in agreement with the preliminary findings of the CMA, which we do not believe the data to support.
“As we have shown this combination is in the best interests of those who use GIPHY and our services in the UK and around the world.
“We’ll work on the misunderstanding that the pact is detrimental to competition with CMA.”
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