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When Alex Chung and Jace Cooke decided to create an animated GIF search engine in February 2013 during a relaxed breakfast chat about how boring many conversations on the internet were, they never thought that such a simple idea would become one of the most haunted ideas and fastest growing websites on the internet. However, when the website drew over a million users in the first week of its creation, they realized they were up to something. In August they were expanded so that users of first Facebook, then Twitter and later, after a $ 2.5 million investment round, many more websites, these short image sequences, connected with feelings and concepts of all kinds, in the middle of their conversations could insert.
A second round of investment in the same month resulted in a valuation of $ 80 million. The company added more features, made some acquisitions, and most of all, grew: by 2016, it had 100 million daily active users and more than a billion GIFs. Users see two million hours of “content” every day. Her initial intuition was correct: not only were conversations boring and animated GIFs could add color to them, but they also became the universal language of emotion that could be easily understood by virtually any speaker of any language.
In March 2018, Google acquired a similar, smaller service, tenor. And finally, on May 15, 2020, Facebook announced the acquisition of Giphy for a total of $ 400 million to integrate its features with Instagram. Some apps like Zoom have temporarily suspended integration with Giphy while Instagram director Adam Mosseri, who anticipated regulatory barriers to operations, insisted that “the acquisition has nothing to do with data.”
Sure, on April 1, the UK antitrust authorities announced an investigation into the takeover: According to their preliminary conclusions, Facebook’s ownership of Giphy may not only allow control of the delivery of these types of formats, and therefore control over the possibilities of other social platforms, to compete with the hegemonic Facebook, but also to become another tool to collect data both about its users and about the usage dynamics of competing social platforms. Now, Giphy is integrated with all kinds of websites – Twitter, Snapchat, Slack, Reddit, TikTok, Bumble, PayPal, Signal, and many others – and it’s not the first time Facebook has used APIs or statistics from any of its services to do this Obtain non-public information about the use of competitors’ tools.
What can Facebook know about you based on the animated GIFs you use in its apps or third-party apps? What can this data be linked to? Would it be a long time before Facebook created and publicized a similar service itself if the takeover were reversed?
Not so long ago, such a transaction would have gone completely unnoticed by regulators. Given the increasing interest in regulating the activities of Big Tech, this is no longer the case: the examination of transactions is much more intense and thorough, trying to assess any possible impact that could help solidify its leadership position. Thanks to Big Tech’s deep pockets, it can acquire or copy anything it sees on the web and immediately add it to its arsenal. This is a problem for the innovation and competitive landscape. And with it the investigation by the UK authorities: The absolute and undisputed market leader in social networks is acquiring the market leader in the search and selection of animated GIFs, one of the most successful tools for all types of expression and communication on the Internet. What could possibly go wrong?