Facebook is facing another regulatory battle, this time in the UK, with The Competition and Markets Authority (CMA) has ruled that Facebook must sell Giphy, which it bought in May 2020, because of the acquisition’s potential to reduce competition between social media platforms and the on-screen advertising market.
According to the CMA:
“An independent CMA commission considering the merger concluded that Facebook could increase its already significant market power over other social media platforms by denying or restricting access to other platforms. Giphy GIFs, directing more traffic to pages owned by Facebook, or by changing access conditions, for example, by requiring TikTok, Twitter, and Snapchat to submit more user data in order to access Giphy GIFs. ”
Increased access to data is one of the elements of concern identified by the CMA, and further identified by the investigation Giphy‘s his own advertising tools, which he developed, had the potential to compete with Facebook’s own ad serving services. Facebook has been shut down Giphy‘s advertising projects shortly after the acquisition.
With these elements in mind, the CMA has he concluded that his competition problems “can only be solved by selling on Facebook Giphy in full to the approved customer ”.
Facebook – now Meta – is likely to appeal the verdict, a move it has already highlighted in its response to the CMA findings
“We do not agree with this decision. We review the decision and consider all options, including the appeal. And consumers and Giphy they are better supported by our infrastructure, talent and resources. Together, Meta and Giphy would improve Giphy‘s product for millions of people, businesses, developers and API partners in the UK and around the world who use it Giphy every day, giving everyone more choices. ”
This probably means that Meta will not sell out Giphy in the near future, as it still seems that this could overturn the decision. But if left, the decision could mark a major shift in the approach to regulatory approval of such acquisitions, allowing technology giants to dominate their markets through tactical purchases designed to stifle competitors and expand their reach.
Meta faced similar issues regarding its acquisitions of both WhatsApp and Instagram, which also significantly improved its market position and squeezed out competition.
Meta acquired the habit of buying competing apps, initially using a data tracking program that helped her discover increasingly popular apps among young users to target her buying strategy to maintain her market leadership position. That Onavo program was shut down in 2019 after various investigations raised questions about the legality of monitoring the behavior of young users, especially through an invasive program, which accessed information from mobile devices and reported.
Based on Onavo’s insight, Meta also tried to buy Snapchat back in 2013, as Snap was on the rise, and when you look at the overall picture of his previous buying strategy, it seems pretty clear that Meta was really trying to buy competitors, and reduce competition. in the market, in order to maximize one’s own position through the pure scale and power of resources, which is the core of this latest case, and various others.
In that sense, its acquisition of Giphy is at the bottom of the scale, but even so, it can be a symbolic and important stance in the technological space, signifying more action and implementation around the same moving forward.
Although it is always difficult to say exactly what impact each case, in each region, will mean in that regard.
For example, earlier this week, the Australian government introduced a new law that would effectively force social media companies to identify trolls, at the request of the law, in certain cases. Legal experts have asked many questions about the approach and its likely effectiveness, and it is difficult to say whether it will actually have any impact on social media companies in a broader sense in terms of how they manage online abuse and address legal issues.
In a way, these types of pushes seem to have a greater impact when applied in the US, where major social platforms are based, although in terms of acquisition there seems to be no way to facilitate region-specific exemptions to meet local requirements.
Which could mean that Meta is, in fact, eventually forced to sell out Giphy as a result of this finding. Again, Meta will investigate all means of appeal, which is why the case will probably be delayed for some time. But it could make a significant shift in the broader regulatory approach, which could change the way large technology platforms work – which could also spur expanded innovation in the sector.
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