Facebook warned by UK watchdog in court clash over Giphy deal | Tech News

Facebook warned by UK watchdog in court clash over Giphy deal

Facebook had to pause its integration with Giphy in June after the CMA said it wanted to investigate whether the deal would give the social network too much information on its rivals’ operations.

By:BLOOMBERG
| Updated on: Aug 20 2022, 23:29 IST
Facebook paid about $400 million for the library of video clips and animated images known as GIFs.
Facebook paid about $400 million for the library of video clips and animated images known as GIFs. (AP)

The U.K.'s merger watchdog warned Facebook Inc. that it could go beyond forcing the tech giant to unwind its purchase of image-hosting platform Giphy Inc. if the deal is deemed to be anti-competitive.

As the two clashed in court over the review of the $400 million deal, the Competition and Markets Authority said that some of Facebook's assets or services might need to be divested “given that Giphy is no longer fully self-standing.” The regulator issued the warning at a London tribunal hearing where Facebook is arguing that the CMA's restrictions on the tie-up were unreasonable and disproportionate.

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Facebook had to pause its integration with Giphy in June after the CMA said it wanted to investigate whether the deal would give the social network too much information on its rivals' operations. The CMA is yet to decide whether to open a formal merger investigation. The regulator is increasingly voicing concerns about internet giants swallowing up smaller firms. Its Chief Executive Officer Andrea Coscelli said last week that the largest tech companies should face scrutiny for any transaction, no matter how tiny.

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“Facebook thought and still thinks the CMA does not have jurisdiction to review the merger,” said Robert O'Donoghue, the company's attorney.

Facebook paid about $400 million for the library of video clips and animated images known as GIFs that can be attached to messages to express emotion. While half of Giphy's business involved Facebook and its apps, the company also provided the same search service to competitors such as Apple Inc.'s iMessage, Twitter Inc., Signal, and TikTok.

Menlo Park, California-based Facebook was handed a boost after Judge Hodge Malek said that the CMA's initial enforcement order may be too broad and would need revising.

The company complains that the CMA has so far refused to ease up on requirements ensuring that it and Giphy remain separate during the merger probe.

But the CMA argues that Facebook hasn't engaged enough for the demands to be refined.

It had “substantially delayed” the progress of the investigation, said Marie Demetriou, the regulator's lawyer.

In a statement Facebook said it was “cooperating fully” with the CMA but believes “the CMA's imposition of unreasonable and unnecessary restrictions on Facebook's global business pending the investigation should be reviewed by the tribunal.”

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First Published Date: 20 Oct, 07:30 IST
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