Facebook's purchase of Giphy faces antitrust review

Brief:

Facebook's planned acquisition of image-sharing platform Giphy faces scrutiny from U.K. antitrust authorities for its possible effect on competition in digital advertising, according to an announcement. The social media giant in May announced plans to buy Giphy and integrate its service with photo-sharing app Instagram.
The U.K.'s Competition and Markets Authority (CMA) hasn't started a formal probe, but last week served Facebook with an initial enforcement order and began seeking public comments on the transaction as an initial step of an investigation. Facebook will cooperate with the antitrust probes and developer access to Giphy won't change in the meantime, Adweek reported, citing the social media company.
Meanwhile, Facebook has halted the integration of Giphy with Instagram, Reuters reported, citing an unnamed source familiar with the matter.

Insight:

The U.K. government's inquiry into Facebook's planned acquisition of Giphy, reportedly for $400 million, isn't likely to affect mobile marketers that run campaigns on the image-sharing platform given that its integration with Instagram was in the early stages. The combination of Instagram and Giphy would create a more powerful advertising platform with an expanded selection of ad formats and sponsored content, but it's still too early for marketers to feel the effects of the merger.

The U.K. government inquiry comes as the social media giant faces antitrust scrutiny for its purchase of popular apps such as Instagram and WhatsApp that have helped to expand its global user base to 2.99 billion. Facebook had been forecast to boost its share of the U.K. digital advertising market to 30% by 2021 from 23% in 2018, researcher eMarketer estimated last year. The growth would help to strengthen the grip of Facebook and Google — the "duopoly" that controls an estimated 70% of U.K. digital advertising — on the market, given their vast troves of first-party data for ad targeting.

The U.K. inquiry isn't likely to be isolated, with the U.S. Department of Justice (DOJ) and the Federal Trade Commission (FTC) seeking to review Facebook's merger with Giphy. The federal agencies haven't resolved a dispute over which one should take the lead in reviewing the deal, Politico reported, citing sources familiar with the matter. The outcome of their talks could be decisive for Facebook, considering that the FTC hasn't challenged the company's acquisitions in the past. The DOJ and FTC already are investigating Facebook in separate antitrust probes as part a broader effort to scrutinize tech giants including Apple, Amazon and Google. Facebook had sought to buy Giphy in 2015, but the company opted to remain independent while obtaining separate financing, TechCrunch reported.

A variety of brands have run campaigns on Giphy since the company launched in 2013 to provide a searchable database of GIF video clips, digital stickers and other content that people could share in messages and social media. Pizza chain Papa John's last month created a sticker pack inspired by basketball star Shaquille O'Neal to promote a new menu item among Giphy users. J.M. Smucker's peanut butter brand Jif this year collaborated with Giphy to create a specially labeled jar that replaces its "Jif" branding with "Gif." Burger chain Wendy's last year debuted three branded video games in a digital arcade launched by Giphy.