Facebook launches broadside against Competition and Markets Authority

Facebook has launched an extraordinary broadside against Britain’s markets watchdog over its plans to block a $400million (£290million) takeover deal. 

The US tech giant has slammed the Competition and Markets Authority for meddling in its plans to buy another US firm, Giphy. 

Facebook said Giphy has no sales, assets, employees or customers in the UK. But the CMA has pledged to take action against any take­overs that harm UK consumers – even if they take place overseas and involve non-British companies. 

Thumbs down: The US tech giant has slammed the Competition and Markets Authority for meddling in its plans to buy another US firm, Giphy

Giphy provides GIFs, which are animated images that users can post on social media websites such as Facebook, Twitter and WhatsApp. The CMA is investigating whether the deal could cause irreversible harm to Giphy’s rivals. Its probe is part of a wider plan to stop tech giants abusing their dominant positions to bully rivals. 

But Facebook complained that the CMA’s fears about the deal were ‘speculative, unsubstantiated and unrealistic’. In documents sent to the CMA, it said: ‘Facebook did not acquire Giphy in order to eliminate a potential rival or foreclose established social media rivals from a critical input.

‘Facebook’s primary driver for the transaction, as demonstrated consistently across Facebook’s internal […] business documents, was to sustain a valued partner relationship in which Facebook had made significant investments, with an opportunity to maintain and enhance the experience of users across its services, working with a smart, creative team of people.’ 

It said there was a ‘vanishingly low’ chance the deal could harm rivals. It insisted they could easily ditch Giphy for other image providers, and that its services were not important to social media users. But rivals said graphics provided by Giphy were a ‘base requirement’ for social media companies. 

A CMA report said: ‘GIFs are very important for user expression, as they are a concise and globally recognised form of communicating emotions.’ 

Other internet companies also warned that Facebook could gain access to important information on possible takeover targets. The CMA wants to crack down on companies that buy up smaller rivals in a ‘killer’ strategy that stops them growing into the next Apple or Google. Its report said: ‘A small number of third parties explicitly highlighted they had concerns regarding ongoing access to Giphy and Facebook’s access to data. 

‘They explained aggregate data could give Facebook unique insights into user and content trends, for example what search terms and cultural reference points are popular. One of these platforms was concerned that such data could also provide Facebook with an early signal of the growth trends of current and emerging rival platforms, which could be used to guide Facebook’s acquisitions.’ 

The CMA said: ‘It is our responsibility to make sure markets remain competitive so consumers and other businesses don’t lose out. It is vital we ensure that Facebook’s merger with Giphy does not stifle competition – and that is what our investigation will get to the bottom of. As with all our merger reviews, we’ll take into account the companies’ submissions.’ 

Facebook said: ‘This merger is in the interests of everyone who uses Giphy and our apps – from developers to service providers to content creators.’

This post first appeared on Dailymail.co.uk