Giphy Acquisition, Facebook Faces Anti-competitive Accusations From UK Regulator

Facebook is accused of dominating the competition in the social media business after the acquisition of Gihpy. (photo: doc. unsplash)

JAKARTA – Facebook has come up with reasons not to sell Giphy in a harsh response to UK competition regulators. Even the tech company is questioning watchdog calls to divest GIF sites over access and anti-competitive concerns.

Facebook argued that "CMA's (Competition and Markets Authority) inability to issue any order against Giphy raises serious questions about the enforcement of the divestment order and whether such an order can be effective." That argument is contained in a letter published by the CMA on Wednesday, September 8.

The CMA last month hinted that Facebook, the world's largest social media company, may need to sell Giphy. According to the CMA, based on their preliminary findings, they stated that the deal would hurt the display ad market and competitive social media networks.

Facebook in its response said the CMA's provisional findings had "fundamental errors," and that UK regulators had failed to provide a "far less disruptive and equally effective" alternative solution to complete the deal.

"Our initial view is that a full divestment of GIPHY would represent a comprehensive and effective solution," said a CMA spokesperson. "However we will consider any behavioral solutions proposed as part of our consultation."

Facebook bought Giphy, a website for creating and sharing animated images, or GIFs, last year. Facebook then to integrate it with its Instagram platform. The deal, which is reported to be worth $400 million, has been the subject of a CMA investigation since January, for violating anti-competitive rules.

Another example where the CMA ordered a combined unit sale was an order in February for Viagogo to divest the international business of US-based ticket retailer StubHub. Viagogo obeyed the order.

Regulators have also set up a digital market wing within it to check the market dominance of big tech companies after saying existing rules were insufficient.