UK fines Facebook millions for lack of communication after Giphy acquisition

Facebook has been fined around 59.2 million euros by the British competition watchdog CMA. The American platform is said to have reported insufficiently to the CMA since the watchdog is investigating the acquisition of .gif platform Giphy.

The CMA launched an investigation into Facebook’s acquisition of Giphy in June 2020, a month after Facebook announced the acquisition. At the start of the Competition and Markets Authority investigation, the watchdog sent an initial enforcement order to Facebook and Giphy. Under such an IEO, the two companies would be required to compete with each other as if they were two more independent companies, and the two companies will not be allowed to further integrate while the investigation is ongoing.

As part of this process, Facebook was required to provide “regular” updates to the CMA, explaining how it was compliant with the IEO. Facebook sent “significantly limited” updates to the CMA, which the watchdog said it warned the company about several times. The company appealed much of the IEO, but the judges disagreed, calling Facebook’s strategy one of “high risk.”

CMA calls the lack of comprehensive reports “a deliberate act” by Facebook and therefore fined the company £50 million. The watchdog says the lack of comprehensive reports has “fundamentally undermined the ability to monitor, prevent or resolve problems.” In addition, Facebook will be fined half a million pounds for changing its Chief Compliance Officer twice without asking for permission.

Facebook tells Reuters it “strongly disagrees” with the fine. The social medium says it has done its best to comply with the IEO. Next steps are still being considered.

CMA’s investigation into Facebook’s acquisition of Giphy is still ongoing. Earlier, the authority said the takeover could potentially harm competition between various social media outlets and that, in the worst case scenario, the takeover could be reversed. In August, the CMA expected to issue a result on October 6; this deadline was therefore not met. The watchdog must now come to a conclusion before December 1.