UK’s Competition Authority Launches Investigation Into Facebook, Giphy Merger

U.K. regulators have officially started a probe into Facebook’s now-completed acquisition of Giphy, a GIF-making and sharing website.

The U.K.’s Competition and Markets Authority officially notified the parties to the case of the investigation. The press release said that the deadline for the authority “to announce its decision whether to refer the merger for a Phase 2 investigation” would be March 25.

However, the competition watchdog got more involved with the matter last year by ordering the tech giant to appoint a “formal hold separate manager” to ensure the independence of the GIF maker as an antitrust review pushed forward.

Last August, the competition watchdog said the manager’s job would be to ensure that Giphy operates “separately from and independently of the Facebook business.”

The competition regulator also cited issues raised by an independent trustee appointed to oversee Giphy as the antitrust investigation continued. The monitor found “a general lack of independence of the Giphy business from Facebook” in part due to the new Facebook employment contracts for Giphy employees.

The markets watchdog said there were “a number of risk factors … present in this case” regarding whether Giphy was being run as an independent business.

The markets watchdog made a decision last June to open up a review of Facebook’s $400 million acquisition of Giphy, which controls a huge 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 such tech competitors as Apple, TikTok and Twitter, which also rely on Giphy for GIFs and video clips.

For its part, Facebook had announced last May that Giphy would become part of the Instagram team.

“Giphy makes everyday conversations more entertaining,” Vishal Shah, Instagram vice president of product, said at the time. The goal, he said, would be helping people “find just the right way to express themselves.”