UK Authority Says Facebook’s Giphy Must Stay Independent

UK Authority Says Facebook’s Giphy Must Stay Independent

Facebook’s acquisition of Giphy has hit another snag, with the United Kingdom’s competition watchdog ordering the tech giant to appoint a “formal hold separate manager” to ensure the independence of the GIF-maker as an antitrust review pushes forward.

The Competition and Market Authority (CMA), in an order published on Monday (Aug. 10) on its website, said the new manager’s job would be to ensure that Giphy operates “separately from and independently of the Facebook business.”

Facebook’s and Giphy’s choice of the hold separate manager, or HSM, must also pass muster with the U.K. competition authority, according to the regulatory order.

The move comes in the wake of the CMA’s decision in June to open up a review of Facebook’s $400 million acquisition of Giphy, which controls a giant library of video clips and GIFs, or animated images, which can be attached to messages.

British regulators cited concerns that Facebook, through its deal for Giphy, would gain valuable inside information on the operations of its tech rivals like Apple, TikTok and Twitter, which also rely on Giphy for GIFs and video clips.

In its order published on Monday, the CMA cited additional concerns raised by an independent trustee recently appointed to oversee Giphy amid the antitrust investigation. The monitor found “a general lack of independence of the Giphy business from Facebook” stemming from the new Facebook employment contracts to which Giphy employees were transferred.

“On the basis of the information available to the CMA and following careful consideration, the CMA considers that a number of risk factors are present in this case, and the CMA is concerned about the incentives in place for Giphy to run the Giphy business independently of Facebook,” the CMA stated in its enforcement order.

The action by the CMA against Facebook is just the latest in a series of high-profile actions and reviews by the U.K. regulator involving American tech companies.

In June, the CMA gave the green light to Amazon’s decision to purchase a minority stake in food-delivery service Deliveroo after a months-long review.