Submission: Competition and Markets Authority's Facebook, Inc / Giphy, Inc merger inquiry

The Adam Smith Institute has joined with the Competitive Enterprise Institute in a submission to the Competition and Markets Authority’s (CMA) investigation into the completed acquisition by Facebook, Inc of Giphy, Inc. The submission was jointly submitted by the ASI’s Head of Research, Matthew Lesh, and the CEI Vice President and senior fellow Iain Murray.

The submission contends that the CMA’s provisional findings:

• dramatically lowers the bar for the CMA policing mergers and acquisitions by overseas parties and thereby constitutes an inappropriate “power grab”.

• make the “relevant market fallacy” by drawing the market under consideration excessively narrowly. Specifically, determining that GIPHY has significant market power as a “searchable GIF library” despite most GIF searches being undertaken on a generic search engine such as Google.

• fails to demonstrate consumer harm, compared to the consumer benefits of better integration of GIPHY’s services into widely used social media platforms.

• makes implausible assertions about the counterfactuals, with respect to GIPHY’s profitability, for a currently loss-making exercise, and limited advertising business, that does not currently operate in the UK and is unlikely to be a competitor to Facebook.

The ASI and CEI conclude that the provisional findings should not become final.