Facebook again weaseled around antitrust scrutiny in its $400 million Giphy acquisition, according to a Bloomberg report citing two sources with knowledge of the matter. If history is any indicator, Facebook can and will do whatever it wants.
The unnamed sources tell Bloomberg that Giphy paid investors dividends, which drew down its assets enough that Facebook and Giphy could avoid alerting antitrust regulators when the social media behemoth moved to purchase the gif-based company in May 2020. The practice is legal, but it makes a strong case for Biden administration appointees to get moving with promised antitrust reform.
The report comes just days after the Federal Trade Commission (FTC) alleged in a refiled lawsuit that, for years, Facebook illegally buried a string of small competitors.
Under federal law, Facebook and Giphy would have had to submit a premerger notification to the FTC and Department of Justice (DOJ) if, at the time of the acquisition last year, the minimum value of the transaction exceeded $94 million.
Giphy declined to comment in an email to Gizmodo. Facebook did not comment on the alleged Giphy payouts but asserted the benefits of Giphy integration for Instagram users and separately called the FTC’s antitrust suit “meritless.”
Its Giphy purchase implied that Facebook had little fear of antitrust regulators, under the reasonable assumption that it’s indestructible after a years-long rampage of alleged antitrust violations. When it announced the Giphy acquisition in May 2020, the FTC was already investigating the company for potential antitrust violations. Last month, a federal judge threw out the FTC’s previous iteration of the lawsuit, arguing that it hadn’t provided sufficient evidence to show that Facebook holds an illegal monopoly over social media. The judge granted the commission 30 days to retry with an amended complaint.
In the complaint filed last Thursday, the FTC cited Facebook’s longtime practice of acquiring rivals and either shuttering them (like the polling app “tbh” and AR-enabled music video app EyeGroove) or leveraging their success (Instagram and WhatsApp). The FTC wrote that Facebook just didn’t have the talent to compete “fairly,” which became clear “after several expensive failures,” and it resorted to “buying up new innovators that were succeeding where Facebook failed.”
Glancing out over the vast graveyard, there lies Poke, Facebook’s Snapchat; Camera, its Instagram; Subscribe, its Twitter; Facebook Places, its Foursquare; Neighborhoods, its Nextdoor. The list goes on.
“Acquiring these competitive threats [Instagram and WhatsApp] has enabled Facebook to sustain its dominance— to the detriment of competition and users—not by competing on the merits, but by avoiding competition,” the lawsuit reads. The FTC asks that it divest from Instagram and WhatsApp.
The point of buying Giphy was ostensibly to give Instagram users access to the Giphy library on Stories and in DMs. Some hypothesized that Facebook might be so granularly petty as to use the service to track popular gifs and commission rip-offs, which seems logical.