The Competition and Markets Authority (CMA) will look at whether a “merger situation” was created, and if this “may be expected to result in a substantial lessening of competition”.
It comes after Facebook acquired GIPHY in May, in a $400 million deal with the GIF sharing service.
The announcement of the CMA’s investigation was made on Friday morning, following the issuing of an enforcement order against Facebook and GIPHY on Tuesday under the Enterprise Act 2000.
The order bans any action from Facebook or GIPHY which may “lead to the integration of the Giphy business with the Facebook business” or “transfer the ownership or control of the Facebook business or the Giphy business or any of their subsidiaries”.
It goes on to add: “Facebook, Tabby Acquisition, Facebook UK and Giphy shall at all times during the specified period procure that, except with the prior written consent of the CMA [that] the Giphy business is carried on separately from the Facebook business and the Giphy business’s separate sales or brand identity is maintained.
The order also prohibits changes to “key staff” at GIPHY or Facebook, including transfers between the two.
In a statement published by CNBC, a Facebook spokesperson said: “Developers and API partners will continue to have the same access to Giphy, and Giphy’s creative community will still be able to create great content.
“We are prepared to show regulators that this acquisition is positive for consumers, developers, and content creators alike.”
Outlets such as TechCrunch and Phone Arena have reported that both Facebook and GIPHY have agreed to comply with the order.
The CMA’s investigation follows an announcement by the Australian Competition and Consumer Commission on Monday that it too would be looking into the takeover.
The UK watchdog is now welcoming comments on the acquisition from interested parties until 3 July.
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