The UK Competition and Markets Authority (CMA) has announced that Facebook’s acquisition of popular motion picture website Giphy – worth an estimated $ 400 million – is raising concerns about digital advertising and the provision of short videos.
And theAnnounced CMA announced that it has completed the first phase of its investigation, which began on January 28, She said: Giphy competed with Facebook outside the UK in digital advertising through paid partnerships with brands such as Pepsi and Dunkin, prior to the deal, which was announced in May of last year.
CMA explained that Giphy might have less incentive to expand its digital ads if it remained integrated with Facebook, and such an outcome would lose potential competition in the market.
The UK Competition and Markets Authority is now planning to move the investigation into Phase Two, unless companies submit legally binding proposals that address their competition concerns in the next five business days.
A Facebook spokesperson said: The company continues to collaborate with the UK Competition and Markets Authority investigation.
Facebook and Giphy are both headquartered in the United States, but the agency can investigate mergers when annual sales of the businesses being acquired reach at least £ 70 million ($ 88 million), or When incorporated firms have at least 25 percent share of any reasonable market.
The authority found evidence that Giphy plans to expand digital advertising partnerships to other countries, including the United Kingdom, and this is worrisome because Facebook has a share of more than 50 percent of the £ 5.5 billion digital advertising market.
Social media companies that compete with Facebook could also lose out if Giphy stops providing them with gifs, CMA said.
Giphy built a digital database and search engine that allows people to share GIFs either through the website or the app, or via social media platforms, such as: Facebook, Instagram and Twitter.
“As the UK competition authority, it is our responsibility to ensure that markets remain competitive,” the authority said.
She added: It is crucial to ensure that Facebook does not use its strong market position to stifle competition, and if companies fail to address our concerns, we launch a more in-depth review to ensure consumers and businesses do not lose out.
A Facebook spokesperson said: This merger is good for competition and for everyone in the UK who uses GIPHY and our services – from developers to service providers to content creators.