The UK’s competition regulator has opened an investigation into the proposed $400m (£320m) takeover of gif search engine Giphy by Facebook amid fears that the acquisition may reduce competition in the UK.
The Competition and Markets Authority (CMA) is inviting comments about Facebook’s purchase of a company that currently provides gif search across many of the social network’s competitors, including Twitter and the messaging service Signal.
Until the inquiry is complete, Facebook has been ordered to pause the integration of its business with Giphy, and make fortnightly reports to the regulator about their compliance with the order.
“The Competition and Markets Authority is considering whether it is or may be the case that this transaction has resulted in the creation of a relevant merger situation under the merger provisions of the Enterprise Act 2002,” the notice reads, “and, if so, whether the creation of that situation may be expected to result in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services.”
The acquisition was seen as a success for Giphy, which has built up a stable but ultimately small business licensing video clips to be turned into animated gifs, and providing the tools to other app developers to integrate them into their own services. It commercialised the concept of the “reaction gif”, a short clip used to denote a particular response to a message or event.
But for Facebook, the more compelling reason for the purchase may be the data that Giphy has about communication across the web. Since many services that integrate with the platform not only use it to find gifs, but also leave the original clip hosted on Giphy’s servers, the company receives information such as when a message is sent and received, the IP address of both parties, and details about the platforms they are using.
That trove of data is thought to have been a compelling part of the reason for acquiring the company, allowing Facebook to gain greater insight into consumer behaviour across the wider web.
Even before the acquisition, however, half of Giphy’s traffic came from its integration with Facebook’s platforms, including Messenger, WhatsApp and Instagram.
The comment phase of the investigation will continue until 3 July.