Facebook’s Giphy purchase will help keep track of competitors
Giphy provides the same search service to many of Facebook’s competitors.
A few months ago, the team at the money-losing GIF search engine, Giphy, reached out to Facebook Inc. Might the social networking company be interested in an investment?
Already, about half of Giphy's activity came through Facebook and its family of apps, which lets users accent their posts and messages with short, animated clips of crying Michael Jordans, popcorn-eating Jon Stewarts and tea-sipping Kermits. While looking at Giphy, Facebook executives realized that they shouldn't just make an investment -- by buying the company outright, they could get something else they value: data.
Giphy provides the same search service to many of Facebook's competitors, Apple Inc.'s iMessage, Twitter, Signal, TikTok and others. The company has a view of the health of those platforms and how often people use them, which is exactly the kind of insight Facebook values most, and has sought in the past. After Giphy joins Facebook, the company will maintain those integrations, and will keep getting data from GIF searches and posts around the internet. The deal price was about $400 million, according to people familiar with the matter.
Since Facebook doesn't own a mobile phone operating system like iOS or Android, it has relied on other means to understand competitors' strengths -- sometimes getting in trouble in the process. In 2013, for instance, Facebook acquired Onavo, an Israeli company that made a VPN, a tool to keep online activity private. Just not from Facebook, which analyzed the data to see which apps were getting popular, and then came up with ways to compete with or purchase them. Apple in 2018 banned the Onavo app, declaring that the data collection violated its app store rules.
It's a risky time for Facebook to do something similar. The company is under antitrust investigation by the Federal Trade Commission, the U.S. Department of Justice and 47 state attorneys general. The FTC investigation, in particular, will look at how Facebook judged competitor apps and tried to buy or quash them, Bloomberg has reported.
After Facebook purchases Giphy, it will join the product team for Instagram – another app Facebook acquired. Instagram product head Vishal Shah said the company is buying Giphy “so that people can find just the right way to express themselves,” according to a blog post. Giphy will “continue to operate its library,” and developers and partners “will continue to have the same access” to all of the content.
If Facebook were to cut off the access, it would look anticompetitive. But the real advantage may come with keeping it.
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