Submissions to the Australian and UK competition authorities on the Facebook/Giphy merger
On 24 February and 1 March 2021 respectively, PI made submissions to the UK Competition and Markets Authority (CMA) and the Australian Competition and Consumer Commission (ACCC), commenting on Facebook's acquisition of Giphy.
In these submissions PI argues that Facebook acquisition of Giphy requires very close scrutiny.
The merger is likely to significantly impede effective competition in several vitally important markets and result in the strengthening of Facebook’s dominant positions, with ramifications for competition and in turn upon consumers and wider society.
PI calls on the CMA and the ACCC to consider effective remedies to mitigate these negative effects, include obtaining binding and specific commitments from Facebook to protect users' data.
Further, PI calls on the competition authorities to closely monitor Facebook's implementation of these commitments.
Giphy is a searchable database for Graphic Interchange Format (‘GIF’) files, stickers, emojis, text, videos and Arcade (remixable video games). This database can be queried through the Giphy search engine, either via its main website (giphy.com), its API or its SDK. Content obtained can then be shared via their URL or be integrated in another service such as a website or an app. Well known integrations of Giphy include messaging services like Whatsapp, Slack, Signal, Telegram, or popular social media platforms such as Twitter or Pinterest. Giphy also offers services for artists and content creators, including design tools, and allows them to promote and receive attribution for their creations.
In its announcement of the acquisition of Giphy, Facebook stated that it "plan[s] to further integrate their GIF library into Instagram and our other apps so that people can find just the right way to express themselves". This broad statement does not seem to provide any useful guidance with regard to how Facebook plans to use its new acquisition.
Concerns and asks put forward in these submissions
PI is concerned that, through the acquisition of Giphy, Facebook would potentially be able to:
- Obtain users’ personal data processed via Giphy and potentially combine it with the vast amount of data it already process to further strengthen its capacity to profile users, predict and influence their behaviours;
- By modifying Giphy’s API, increase the categories of personal data collected from users;
- Impose to clients (including Facebook’s competitors in the social media and messaging market) conditions for the use of Giphy, potentially preventing clients from protecting their users’ personal data;
- Increase its capacity to deliver targeted ads both to Giphy’s users and internet users even outside Facebook’s platform and services (and including within the ecosystems of its competitors) through increase tracking capabilities.
Short of preventing the acquisition, the CMA and the ACCC should consider effective remedies to mitigate these risks. These should include obtaining binding and specific commitments from Facebook to:
- refrain from combining personal data from Giphy with other personal data processed by Facebook or with personal data from other third-party services, and from requiring Giphy’s users to sign in with other services of Facebook;
- continue to licence free APIs offering at least the functionalities of APIs as they currently exist without additional restrictions or changes to Terms of Services limiting or preventing their use by external services;
- refrain from merging Facebook’s advertising services with any advertising services Giphy might develop, and refrain from processing personal data from Giphy to improve its own advertising services;
- refrain from processing any data from Giphy’s search engine for any purpose other than delivering content related to search queries (e.g.: emotion recognition, high level analytics of users feelings etc.)
PI believes that these commitments could address some of the concerns identified in these submissions. However, we remain concerned by the track record of Facebook and its failure to comply with commitments made before competition regulators in the past. For this reason, we believe that any imposed remedies should be actively monitored and enforced by the competition authorities.