Technology

Facebook fined $69 million by UK competition watchdog for 'deliberate' breach during Giphy probe


The logos of Facebook and Giphy.

Aytac Unal | Anadolu Agency via Getty Images

LONDON — Facebook has been fined £50.5 million ($69 million) for breaching an order imposed by the U.K. competition regulator, which is probing its takeover of gif-sharing platform Giphy.

The Competition and Markets Authority, which handed out the penalty Wednesday, issued Facebook with what’s known as an initial enforcement order in June 2020 as it began its investigation into the firm’s acquisition of Giphy.

The order is designed to ensure companies continue to compete as they would in the absence of a merger and it prevents them from integrating further.

Facebook is legally required to provide the CMA with regular updates to show that it is complying with the order but the CMA said Facebook “significantly limited the scope of those updates” despite repeated warnings.

The regulator added that this is the first time a company has been found to have breached an IEO by “consciously refusing” to report all the required information. It added that Facebook’s failure to comply was “deliberate,” noting that the company was given multiple warnings.

Facebook did not immediately respond to a CNBC request for comment.

“Initial enforcement orders are a key part of the U.K.’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.”

He added: “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.”

In August, the CMA said it had provisionally found Facebook’s purchase of Giphy would harm competition between social media platforms and remove a potential challenger in the display advertising market.

The CMA said it may require Facebook to unwind the deal, which is reportedly worth $400 million, and sell off Giphy if its competition concerns are ultimately confirmed.



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