Facebook is drawing scrutiny from U.K. regulators.
The United Kingdom’s competition watchdog is investigating Facebook’s recent purchase of Giphy, the animated picture platform.
The Competition and Markets Authority (CMA) announced Friday (June 12) the probe will determine whether the transaction will reduce competition and raise prices for goods or services.
“The CMA invites comments on the transaction from any interested party,” the agency said in a statement announcing it has issued an “Initial Enforcement Order.” The 10-page demand prevents the two companies from merging while the CMA conducts its investigation.
For now, the ruling prevents transfer of staff between the companies and none of Giphy’s technology can be integrated with Facebook’s products. If Facebook fails to comply it could be subject to fines.
While Facebook and Giphy are U.S.-based corporations, the CMA can investigate mergers when the business being acquired has annual sales of £70 million ($88 million) or more or when the combined businesses have at least a 25 percent share of any reasonable market, CNBC reported.
A Facebook spokesperson told CNN Business it is “prepared to show regulators that this acquisition is positive for consumers, developers, and content creators alike.”
News that the online database for users to share videos was joining Facebook came in Mid-May. At the time of the acquisition, Facebook said it plans to further integrate Giphy into the Instagram app “so that people can find just the right way to express themselves.”
Facebook rejected the allegation that the deal could reduce competition.
“Developers and API partners will continue to have the same access to Giphy, and Giphy’s creative community will still be able to create great content,” the spokesperson said in a statement. “We are prepared to show regulators that this acquisition is positive for consumers, developers, and content creators alike.”
Giphy did not respond to a request for comment.