Now that the world remains patiently watching after being left aghast by Mark Zuckerberg’s attempt at human-to-human communication in his Metaverse 101 video series (if this article gets enough comments, I’m happy to delve into a comprehensive analysis of Mr. Zuckerberg’s unnatural arm movements), we cannot and must not allow the opportunity to discuss Facebook’s (alright, hereafter, ‘Meta’) failed acquisition of Giphy. Albeit the company bought Giphy in 2020, the UK’s competition regulations watchdog, The Competition and Markets Authority (CMA), has ordered Meta to get rid of, or rather, sell, Giphy.
Giphy, the Gif-sharing search engine, was bought by Meta last year for £236m – or, to put it into perspective, almost 8 times more than the UK government pledged towards refugees from This hefty transaction appeared profoundly beneficial to Meta’s pixelated vision of a hypothetical techno future: Giphy is not only host to an immense database of meticulously organized short-loop videos, it also has its own space in the online communication hall of fame. Giphy not only provides content to Facebook, Instagram, and Whatsapp, as well as other Meta derivative brands – it provides services for Snapchat and Chinese-born Tiktok. Most social media users around the world have seen or used the company’s database themselves to send messages, as indeed, a short GIF says a thousand text words. Once the status of Giphy as part-household name part-communication tool is made clear, it doesn’t take a rocket scientist to infer why Facebook wanted to take the company and integrate its database with Instagram.
The CMA was less keen to bend to Meta’s will, to the surprise of those who were spectators to the various acquisitions made in the technology sector this year. Personally, I think the regulations body simply carried out an action that is well within their remit and intended purpose. It would be unwise to say the CMA has no justified concerns; the acquisition would thwart competition among other social media platforms and the media advertising industry – for once, the deal already removed Giphy as a potential challenger in the said advertising market. And what would the result be? The CMA have said that to deny or limit other platforms’ access to Giphy GIFs would divert traffic to sites owned by Meta, stating that “Facebook, WhatsApp and Instagram […] already account for 73% of user time spent on social media in the UK”. The CMA also listed concerns about Meta potentially asking users to provide more personal data in exchange for Giphy GIF access. A future in which more users are funnelled into spending almost 100% of their screen time on Facebook and Instagram because Meta has monopoly over visuals is not bound to happen tomorrow, but without any regulation at all (I am taking the liberty to sneak a “ceteris paribus” in) the possibility of this happening is definitely not zero. And then there’s the rise of client interest in data protection and privacy. Allow me to point towards recent cases such as These are only some of the many examples one could point towards to say, authoritatively, that Facebook taking over social media and communication companies to get more of our personal data will not go down well with the British (and greater) public.
Even though these are only some examples as to why one might root for the CMA’s post-close interception, Meta is not going down without a fight. The company has already stated they’re so we’ll have to remain vigilant to see how exactly they justify keeping Giphy instead of selling it off to comply with the CMA. However, it is clear that whatever the outcome, US companies are going to have to adjust their strategies for expansion into the UK.
The US’ Federal Trade Commission conducted a study which revealed that major Big Tech companies — including Google, Amazon, Microsoft, and of course, our current protagonist, Facebook — made 819 acquisitions that were not registered and did not meet reporting requirements. The custom of operating under a regulatory environment that facilitates Big Tech’s escalating pace of transactions is something these companies will have to adjust in the UK and Europe in the coming years, is what it seems. But this need to adapt is not new. Brexit, with its jurisdictional uncertainties, and COVID19, with, well, disrupting everything, have so far served as Goliaths standing in between US tech companies’ itch to settle across the pond and the promise of a new ‘EU-regulation-free’ market to tap into. The CMA potentially setting a precedent with the Giphy acquisition means that perhaps a third obstacle to surmount is well underway.