Competition watchdog says Facebook could have to sell Giphy

Facebook could have to sell Giphy, a search engine for Gifs, which it bought for a reported $400m (£289m) last year.

The Competition and Markets Authority provisionally found Facebook owning Giphy "could lead it to deny other platforms access to its Gifs".

The CMA will now consult before making a final conclusion. And if its concerns are confirmed, the it may require Facebook to sell Giphy.

Facebook said the findings were "not supported by the evidence".

Giphy's vast library of looping short video animations is hugely popular - including among Facebook's competitors.

Gif stands for Graphics Interchange Format, an image format developed in the 1980s to display static and moving images.

They have become a staple of social-media posts and comments.

Enforcement order

In May 2020, when the deal was announced, Facebook said half of Giphy's traffic came from its apps, including WhatsApp and Instagram.

But it also provides Gifs to competitors such as TikTok, Snapchat and Twitter.

In June 2020, the CMA sent an enforcement order to Facebook, effectively putting a hold on any merging of the companies until its investigation is over.

Now, announcing its provisional findings, the CMA said Facebook could in theory stop other platforms from using the service.

Market power

It also warned Facebook could require Giphy customers, such as TikTok, Twitter and Snapchat, to provide more user data in order to access Giphy Gifs.

"Such actions could increase Facebook's market power, which is already significant," the CMA said.

It also said the purchase had removed a potential competitor to Facebook in display advertising.

At the time of the purchase, Giphy had said it was considering expanding its advertising services to other countries, potentially including the UK, the competition watchdog noted.

'Best interest'

Facebook told BBC News: "We disagree with the CMA's preliminary findings, which we do not believe to be supported by the evidence.

"As we have demonstrated, this merger is in the best interest of people and businesses in the UK - and around the world - who use Giphy and our services.

"We will continue to work with the CMA to address the misconception that the deal harms competition."