Facebook/Giphy Merger Worries UK Competition Watchdog

The U.K.’s Competition Market Authority (CMA) has raised some concerns about Facebook’s merger with the GIF provider Giphy that could derail the deal. The CMA said on Thursday (Aug. 12) that its provisional findings suggest the merger will harm competition between social media platforms and remove a display ad challenger from the market.

If the CMA’s concerns are confirmed, the authority said it could require Facebook to walk back the merger and sell Giphy, the world’s largest gif provider.

“Millions of posts every day on social media sites now include a GIF,” the CMA said in a news release. “Any reduction in the choice or quality of these GIFs could significantly affect how people use these sites and whether or not they switch to a different platform, such as Facebook. As most major social media sites that compete with Facebook use Giphy GIFs, and there is only one other large provider of GIFs – Google’s Tenor – these platforms have very little choice.”

The authority has provisionally found that Facebook’s ownership of Giphy could lead it to deny other platforms access to GIFs or change the terms for this access, thus increasing its already substantial market power.

“The CMA provisionally found that Facebook’s ownership of Giphy could lead it to deny other platforms access to its GIFs,” the authority said. “Alternatively, it could change the terms of this access – for example, Facebook could require Giphy customers, such as TikTok, Twitter and Snapchat, to provide more user data in order to access Giphy GIFs.”

The authority also said the deal ended Giphy’s plans to expand its display advertising services into the U.K., thus removing a major source of competition. Its final report on the matter is due on Oct. 6.

The CMA’s findings come a little less than two months after the authority announced it was studying whether Google and Apple’s duopoly hurts competition, hampers innovation or leads to higher consumer prices.

Read more: UK CMA Launches Probe Into Apple And Google Mobile Platform Duopoly