Facebook's Giphy deal draws UK competition watchdog's attention

(Reuters) - Facebook’s (FB.O) acquisition of popular GIF website Giphy is being scrutinised by Britain’s competition watchdog for possibly reducing competition in the United Kingdom.

The parent of messaging app WhatsApp bought Giphy, a popular website for making and sharing animated images, or GIFs, in May to integrate it with its rapidly growing photo-sharing app, Instagram.

While a formal probe is yet to begin, the Competition and Markets Authority (CMA) earlier this week served Facebook with an initial enforcement order and on Friday began the first stage of an investigation, inviting comments on the transaction from any interested party. (bit.ly/2B0CX4s)

Facebook, the world’s largest social media network, did not immediately respond to a Reuters request for comment.

Giphy sought to quell some of the concerns in a statement. “Everyone will continue to have the same access to GIPHY. We look forward to demonstrating how this partnership is a win for our users, partners, and content creators,” it said.

According to Facebook, 50% of Giphy’s traffic comes from Facebook’s apps, with half of that coming from Instagram.

The deal, pegged at around $400 million by news website Axios, came through as Facebook was already under scrutiny over antitrust concerns, and the company is now taking fire for its decision to not challenge inflammatory posts by U.S. President Donald Trump.

Some advocacy groups had already raised concerns when the deal was announced and Facebook had then said that Giphy’s integrations with other social platforms like Twitter (TWTR.N), Snapchat (SNAP.N) and ByteDance’s TikTok would not change.

The American Economic Liberties Project, an antitrust advocacy group, had said that Facebook and Google are monopolizing online communications through such deals, while urging the Federal Trade Commission to probe the deal.

Alphabet Inc’s Google (GOOGL.O) had acquired GIF platform Tenor in 2018 and integrated it into its image search function.

Reporting by Shanima A and Pushkala Aripaka in Bengaluru; Editing by Maju Samuel

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