Facebook is accused of hiding information about its Giphy acquisition on purpose.
What you need to know
- Facebook was fined in the UK for failing to provide full information related to its Giphy acquisition.
- UK regulators imposed a £50.5 million fine on the company due to its failure to submit updates about whether it halted further integration with Giphy after purchasing it.
- The social media giant has been accused of deliberately breaking that order.
The UK’s competition watchdog has fined Facebook £50.5 million (approximately $69.7 million) for failing to submit the necessary information about its Giphy acquisition, marking the first time a company violated such a merger policy.
The UK’s Competition and Markets Authority (CMA) said it fined Facebook for violating an initial enforcement order (IEO) that had been in place since June of last year, when the regulators launched an investigation into the company’s $400 million acquisition of Giphy. The order was intended to prevent further integration of the two companies and to keep competition as it was before the merger.
Under that order, the social media giant is required to submit full updates to the CMA demonstrating its compliance with the order, which is a standard oversight procedure. Despite repeated warnings from regulators, Facebook allegedly made a concerted effort to conceal the required information.
“We strongly disagree with the CMA’s unfair decision to punish Facebook for a best effort compliance approach, which the CMA itself ultimately approved,” Facebook told Android Central in a statement. “We will review the CMA’s decision and consider our options.”
In August, the CMA concluded its investigation, noting that the merger could seriously harm competition among social platforms. It claimed that Facebook’s ownership of the GIF-creation platform “could lead it to deny other platforms access to its GIFs,” referring to the fact that the platform is available on many of the best Android phones and laptops.
While regulators have yet to make a final decision, Facebook’s actions are thought to have harmed the CMA’s ability to reverse the acquisition. According to the competition authority, the company “significantly limited the scope of those updates.”
In addition to the penalty, Facebook has also been fined £500,000 ($700,000) for swapping its chief compliance officer twice with no approval from regulators. Joel Bamford, senior director of mergers at the CMA, said the fines “should serve as a warning to any company that thinks it is above the law.”
