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Facebook Rejects UK Watchdog’s Concerns Over Giphy Deal

 |  September 8, 2021

Facebook has rejected the concerns of the UK competition regulator over its acquisition of Giphy, a provider of popular animated images, and said it shouldn’t have to sell the company, reported Reuters.

Facebook bought Giphy in 2020 with the intention of integrating it with Instagram. In August this year, the UK’s Competition and Markets Authority stated it had provisionally found that the deal would harm competition between social-media platforms and in the display advertising market and that it could force Facebook to sell Giphy.

Related: UK Regulator Says Facebook’s Giphy Deal Raises Competition Concerns

In a letter published Wednesday, September 8, by the Competition and Markets Authority (CMA), Facebook argued that the regulator had failed to show a substantial effect on competition and that no remedies were necessary.

Facebook also stated there were “serious questions” as to whether the CMA could enforce an order for it to sell Giphy.

“These are questions which the CMA must carefully consider, and address, before taking the extreme intrusive step of ordering the sale of a company which does not carry on business in the UK,” Facebook stated.

The CMA last month hinted that Facebook, the world’s largest social media company, might need to sell Giphy based on its preliminary findings that the deal would hurt the display advertising market and other social media networks.

While far from the largest deal Facebook has ever done, the Giphy acquisition, could be the company’s first high-profile deal to be unwound by government officials since Facebook began confronting questions about its powerful position in digital markets several years ago. And it shows how closely officials are watching Facebook’s every move.

In a statement, a Facebook spokesperson said the company disagrees with the finding and that it lacks evidence. “This merger is in the best interest of people and businesses in the UK — and around the world — who use Giphy and our services,” the spokesperson said. “We will continue to work with the CMA to address the misconception that the deal harms competition.”