Facebook could be made to sell Giphy over concerns raised by the UK’s Competition and Markets Authority (CMA).

The regulatory body warned that Facebook’s takeover of the video search engine could negatively impact competition between social media platforms.

Giphy provides an online library of GIFs as well as a tool for users to create their own short, looping videos. The company offers the largest catalogue of GIFs, while Facebook is the UK’s main provider of social media and display advertising, currently accounting for a 50% share of the market.

According to the CMA, with millions of GIFs shared across all social platforms every day, any company able to restrict the choice or quality of GIFs could determine how people use these sites and determine which platform they use.

The CMA noted that most of Facebook’s competitors use Giphy for their GIFs. There is only one other large provider of GIFs available, Google’s Tenor.

He Who Controls the GIFs…

The provisional decision came after an in-depth investigation from CMA. It warned that Facebook could potentially deny other platforms access to its GIFs or change the terms of this access, including providing additional user data to access Giphy’s content.

According to the CMA, Facebook’s platforms, Facebook, WhatsApp, and Instagram, account for over 70% of the time people spend on social media and are accessed at least once a month by 80% of all internet users.

Before the merger, Giphy offered its own paid advertising schemes in the US, with plans to expand that to other countries, including the UK.

However, the group’s takeover removed a potential challenger to Facebook’s advertising dominance. After the deal, Facebook terminated Giphy’s paid advertising partnerships.

The CMA warned that if its concerns were confirmed, it may order Facebook to sell off Giphy.

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Chair of the independent inquiry group carrying out the investigation Stuart McIntosh said: “Millions of people share GIFs every day with friends, family, and colleagues, and this number continues to grow. Giphy’s takeover could see Facebook withdrawing GIFs from competing platforms or requiring more user data in order to access them.

“It also removes a potential challenger to Facebook in the £5.5 billion display advertising market. None of this would be good news for customers.

“While our investigation has shown serious competition concerns, these are provisional. We will now consult on our findings before completing our review. Should we conclude that the merger is detrimental to the market and social media users, we will take the necessary actions to make sure people are protected.”

Facebook bought Giphy back in May 2020 for $400 million. Facebook wanted to combine its library of GIFs with social media apps such as Instagram. The company originally attempted to buy Giphy in 2015, but its offer was refused.

The CMA will now hear from interested parties about its provisional findings with a final report due by 6 October 2021.