The competition regulator is expected to take a decision in late March on whether a phase 2 investigation is needed for the transaction

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Facebook’s acquisition of Giphy faces phase 1 merger inquiry by UK CMA. (Credit: Gerd Altmann from Pixabay)

The UK Competition and Markets Authority (CMA) has launched a phase 1 merger inquiry into Facebook’s previously closed acquisition of Giphy over competition concerns.

The British competition regulator said that it has enough information pertaining to the completed acquisition by the social media giant to enable it to begin an inquiry for deciding if the deal needs a phase 2 investigation.

The deadline for CMA’s decision is 25 March 2021. The phase 1 investigation into the deal follows an initial enforcement order issued by the regulator in June 2020 and a window seeking comments from market players on the acquisition between the months of June and July in 2020.

Giphy is a US-based online database and search engine using which users can search for and share short looping videos without sound, that are similar to animated GIF files.

In May 2020, it was acquired by Facebook for a reported price of $400m.

The social media giant said that Giphy will become a part of Instagram, a photo and video-sharing social networking service, which the former had acquired for $1bn in 2012.

Facebook had said that by bringing Instagram and Giphy together, it can make it easier for users in finding appropriate GIFs and stickers in their Facebook Stories and Facebook Direct.

However, the social media giant had paused the announced integration of the GIF maker into Instagram following the initial enforcement order issued by the CMA in June, reported Reuters, citing a source.

Meanwhile, a Facebook spokesperson said: “We will continue to fully cooperate with the CMA’s investigation. This merger is procompetitive and in the interests of everyone in the UK who uses GIPHY and our services.”