UK market watchdog starts merger inquiry into Facebook acquisition of Giphy

A United Kingdom government watchdog has launched the merger inquiry into Facebook's acquisition of Giphy to investigate whether the deal will stifle competition in the market. The Competition and Markets Authority (CMA), a department responsible for preventing anti-competition activities in the UK, on January 28 announced it has launched a probe into the Facebook-Giphy deal and has set a deadline of March 25 to decide whether a further investigation should be carried out. 

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Facebook acquired Giphy earlier last year for $400 million, following which the CMA started examining the deal to see if it will suppress competition. Facebook had reportedly planned to merge Giphy with Instagram but the CMA examination prevented it from doing so as the department called on the companies to continue as it is until the probe is finished. Giphy, a platform for GIF videos, is largely used by users of Facebook-owned apps, including Instagram, Messenger, and WhatsApp. 

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Facebook lost tribunal appeal

Last year, the CMA imposed an initial enforcement order (IEO), which prevents merging companies from integrating until the probe is complete. Facebook later requested for 'derogation', which is requested by merging companies to seek reprieve from parts of IEO. However, the CMA declined Facebook's request following which the US-based company moved to the Competition Appeal Tribunal. The tribunal dismissed Facebook's appeal, which was welcomed by the CMA, who said the "judgement sends a clear message". 

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Facebook has been accused on several occasions of practising unfair business practices to stifle competition. The social media giant is notoriously known for acquiring companies, which it sees as a potential threat to its unchallenged monopoly in the market. Both Instagram and WhatsApp were independent platforms before they were acquired by Facebook. 

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