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Facebook Worker Discrimination

Facebook fined £50 million in latest regulatory punishment over Giphy acquisition

Andrew Griffin
Wednesday 20 October 2021 19:17
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Facebook has been fined £50.5 million by the UK’s competition regulator in the first case of its kind.

The social network was punished over its acquisition of Giphy, a platform that allows people to share GIF images.

It is just the latest in a range of regulatory issues for Facebook, which is also facing suggestions that it should be broken up and have WhatsApp and Instagram split off into separate businesses.

In the latest Giphy case, Facebook was accused of failing to provide important information to the competition regulator into the acquisition.

The Competition and Markets Authority (CMA) launched a probe into the acquisition in June last year, shortly after the deal was announced, over concerns about a “substantial lessening of competition”.

Giphy‘s user-uploaded library of animated images is already integrated and used widely by Facebook’s family of social media apps but can also be used on other platforms such as Twitter.

As part of the investigation, the social network was ordered to keep the two businesses separate until a conclusion was reached.

Under the initial enforcement order (IEO), Facebook is also expected to provide the regulator with regular updates demonstrating its compliance but the CMA said the firm had significantly limited the scope of those updates despite repeated warnings.

“Initial enforcement orders are a key part of the UK’s voluntary merger control regime,” said Joel Bamford, senior director of mergers at the CMA.

“Companies are not required to seek CMA approval before they complete an acquisition but, if they decide to go ahead with a merger, we can stop the companies from integrating further if we think consumers might be affected and an investigation is needed.

“We warned Facebook that its refusal to provide us with important information was a breach of the order but, even after losing its appeal in two separate courts, Facebook continued to disregard its legal obligations.

“This should serve as a warning to any company that thinks it is above the law.”

Facebook responded to the fine, saying: “We strongly disagree with the CMA’s unfair decision to punish Facebook for a best effort compliance approach, which the CMA itself ultimately approved.

“We will review the CMA’s decision and consider our options.”

The watchdog said this is the first time a company has breached an IEO it has issued, by consciously refusing to report all the required information.

Attempts by the social network to limit the terms of the CMA’s order were previously thrown out by the Competition Appeal Tribunal and Court of Appeal.

Additional reporting by Press Association

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