The largest social media company of the world Facebook and the animation firm Giphy was given just give working days by the competition regulators of the United Kingdom to come up with definitive proposals and submit the same with the regulator about the way the companies want to address the concerns of the regulator about the merger deal between the company. According to analysts, if the deal goes through, it will have an immediate impact on the digital advertising industry and the supply of animated images.
An initial investigation into the merger deal was initiated in January by the Competition and Markets Authority of the UK – at a time when there was increasing global regulatory scrutiny of the United States based social media company over concerns for market domination and antitrust.
In its preliminary investigations, the UK watchdog found that Giphy, which was once a rival of Facebook in the area of digit ads through paid sponsorships outside the UK, had made up plans for further expansion in sponsorship deals into other countries including in the UK.
Announcing the latest intimation to the two companies, the UK regulatory authority said that there could be less incentive for Giphy for expansion of its digital advertising business if the company remained merged with Facebook. The regulator said that this was of particular concern for it because of the existing market power in display advertising that is currently held by Facebook.
This is particularly concerning given Facebook’s existing market power in display advertising,” the regulatory authority said bit.
Giphy, which is a website for making and sharing animated images or GIFs, was acquired by the largest social media company of the world in May last year with the aim of integrating the acquired company into the rapidly growing photo-sharing app, Instagram which is also owned by Facebook.
However according to reports quoting source information in June had claimed that the planned integration was being halted by Facebook.
At that time of the acquisition, Facebook had said the merger would not result in any changes to the integrations that Giphy had already made with some of the other social media platforms – which are also rivals of Facebook, including Twitter, Snapchat and ByteDance’s short video sharing app TikTok.
On the other hand, a spokesperson for social media form said that the merger of Giphy with it was good for competition and was in the interests of everyone in the UK who uses Giphy and the services of Facebook – which would include everyone from developers to service providers to content creators. The company will however cooperate with the probe, said the Facebook spokesperson.
(Adapted from Reuters.com)