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Facebook may be forced to sell Giphy after UK regulator’s findings

UK Competition Regulatory Authority found that Facebook’s acquisition of GIF sharing platform Giphy would hurt social media and digital advertising competition. As part of its preliminary solutionThe watchdog expressed concerns that Facebook could prevent competitors, including TikTok and Snapchat, from accessing the Giphy service they already use. He added that Facebook may also require clients of the GIF platform to transfer more data in exchange for access. If his objections are confirmed in the current review, the regulator said it could force Facebook to terminate the deal and sell Giphy in its entirety.

The Competition and Markets Authority (CMA) ultimately decided that the deal should increase Facebook’s significant bargaining power. Collectively, its suite of apps, including Facebook, WhatsApp and Instagram, account for 70 percent of social media activity, and are accessed at least once a month by 80 percent of internet users, according to CMA.

Beyond social media, the watchdog has suggested the acquisition could eliminate a potential rival Facebook in the $ 5.5 billion display advertising market. Citing Facebook’s termination of its partnership with Giphy’s paid advertising following the deal, the regulator said the move effectively halted the company’s advertising expansion (including to other countries such as the UK). This, in turn, has influenced innovation in the broader advertising sector, CMA explained.

Facebook’s announcement last May of its acquisition of Giphy with plans to integrate with Instagram for $ 400 million immediately raised regulatory concerns. The social network is facing antitrust complaints in the US and EU over its monopolies on social media and advertising, respectively. At the same time, the UK has stepped up its focus on big technology by creating a dedicated digital markets unit to oversee the likes of Google, Facebook and Apple. The new agency is part of the CMA and aims to give people more control over their data.

The CMA today echoed these principles in its original decision. The regulator said it will “take the necessary action” to protect users if it finds the merger is harmful to competition. He will now consult on his findings as part of the review process. The final decision is scheduled for October 6th.

Facebook reported Diversity that he “disagrees” with the preliminary findings of the CMA. “We will continue to work with CMA to address the misconception that the deal is damaging to competition,” the company added. The company previously argued that Giphy does not operate in the UK, which means that CMA has no jurisdiction over the deal. he stated that Giphy’s paid services cannot be classified as display advertising according to the regulator’s own market definition.

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