U.K. Opens Investigation of Facebook’s Purchase of Giphy

The U.K. started a formal investigation of Facebook Inc.’s $400 million purchase of Giphy Inc., saying it will look at whether the deal hurts competition in the supply of video clips and animated images.

The Competition and Markets Authority set a deadline of March 25 for its initial decision, setting a timeline on a review that has already been marked by a court clash. Facebook had previously argued that the CMA imposed unreasonable and disproportionate restrictions on the company.

The CMA is increasingly voicing concerns about internet giants swallowing up smaller firms. Its Chief Executive Officer, Andrea Coscelli, said in October that the largest tech companies should face scrutiny for any transaction, no matter how tiny.

Facebook had to pause its integration with Giphy in June after the CMA said it wanted to investigate whether the deal would give the social network too much information on its rivals’ operations.

“We will continue to fully cooperate with the CMA’s investigation,” Facebook said Thursday in an emailed statement. “This merger is procompetitive and in the interests of everyone in the U.K. who uses Giphy and our services.”

While half of Giphy’s business involved Facebook and its apps, the company also provided the same search service to competitors such as Apple Inc.’s iMessage, Twitter Inc., Signal, and TikTok.

The CMA announced the move Thursday in a statement on its website.

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