Giphy buyout: Facebook ordered to pay 60 million euros for “deliberate” violation of an injunction

Bad news for Facebook. This Wednesday, the British competition authority imposed a fine of 50.5 million pounds on the group created by Mark Zuckerberg (60 million euros), as part of its merger with Giphy. The move comes as Facebook is in turmoil, accused of harming its users and the victim of a huge outage a few weeks ago.

According to the British competition regulator, the Competition and Markets Authority (CMA), in addition to these current setbacks, Facebook has “knowingly violated” an injunction issued in June 2020, and refused to transmit the information that was to it. asked about the takeover of the company specializing in GIFs – those viral animated images popular on the Internet.

“This is the first time” that such an offense has occurred, the CMA said in a statement. The British authority had ordered Facebook to stop the integration process of the company Giphy, which the Californian firm did not do. In addition, it did not send a number of documents that the CMA requested to study the impact of this takeover in detail.

“In view of the multiple warnings given to Facebook, the CMA considers that the non-compliance with its order was deliberate” and consequently hit Facebook with a fine of 50 million pounds for this “major violation which fundamentally harms” its mission competition regulation.

Danger on competition

The CMA had issued these injunctions in order to “ensure that the companies continue the game of competition as they would have done without the merger and prevent them from integrating further as long as the investigation continues”, explains the authority. regulation. Founded in 2013 and based in New York City, Giphy is one of the leading Gif sharing platforms, claiming over 700 million daily users.

Facebook had unveiled the takeover of this company in May 2020, for an estimated amount of $ 400 million. The platform wanted to integrate Giphy with Instagram, its photo and video sharing service, to allow its users to share and create moving images with the tools provided by this service.

The CMA considers that this buyout is potentially penalizing for users and the online advertising market. The other social networks which could have more difficulty integrating Gif, because they will no longer be able to use Giphy. Moreover, under the control of Facebook Giphy could broadcast advertisements. However, it alone holds more than half of the digital advertising market in the United Kingdom. A quasi-monopoly situation.

A possible resale

In August of this year, the CMA discussed a possible forced resale of Giphy, to prevent Facebook from taking such a dominant position. The investigation is still ongoing on the merger and “no decision has been taken,” says the CMA. In other words, the heavy fine imposed on Wednesday only concerns a small aspect of the case.

For its part, Facebook said “to be in strong disagreement with the CMA on the unfair decision to punish Facebook in its best efforts to respect (the injunction)”, and adds “to evaluate its options”. The group led and co-founded by Mark Zuckerberg has been the subject of a series of legal proceedings and increasingly harsh criticism from civil society and authorities.

He notably agreed on Tuesday to pay up to $ 14.25 million to settle lawsuits against the American authorities accusing the group of having reserved certain well-paid positions for foreign employees to the detriment of American citizens or permanent residents.

Two weeks ago, the network giant was also the victim of a giant blackout. And in early October, Facebook saw its image tarnished by the US Congress hearing of a computer engineer who accused the group of renouncing moral principles in the name of profit, leading US lawmakers to promise to better regulate it. The company could change its name in the coming weeks. A way to be forgotten.

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