UK watchdog blasts Facebook’s ‘high risk strategy’ in Giphy case
CMA stresses 'the serious and flagrant nature' of the company’s failure to respect an order in the agency's merger probe.
The U.K. competition authority said Facebook has adopted a “high risk strategy,” which ultimately led to a roughly €60 million fine, in the company’s approach to an order imposed by the agency as part of an ongoing investigation into Facebook’s acquisition of animated image provider Giphy.
Last week, the Competition and Markets Authority slapped a £50.5 million fine on the U.S. firm, saying that it breached an order to prevent the companies from integrating while the merger investigation is ongoing. Such orders make sure that companies involved in a merger continue to compete as they would without the transaction.
In its full decisionpublished Thursday, the authority detailed three breaches of the order, called an initial enforcement order (IEO).
“The CMA has found that Facebook adopted a high risk strategy reflecting a decision not to fully comply with its obligations under the IEO, which manifested itself through three breaches” of the order, the CMA said.
As part of the merger review process, Facebook is expected to regularly update the authority on its compliance with the order. The CMA said that the company failed to submit such updates “in the appropriate form.”
The company also failed to disclose in a timely manner an outage affecting the only provider of animated images on Facebook platforms other than Giphy, the CMA said. Some details of the outage were redacted, but the document says that it “was considerably longer than 24 hours,” it said. Finally, Facebook changed its chief compliance officer twice without asking for consent.
The CMA stressed “the serious and flagrant nature of Facebook’s failure to comply with the order,” adding that “Facebook has no reasonable excuse for its failures to comply with the IEO.”
A spokesperson for Facebook referred to comments the company made last week. “We strongly disagree with the CMA’s unfair decision to punish Facebook for a best effort compliance approach, which the CMA itself ultimately approved,” they company said at the time. “We will review the CMA’s decision and consider our options.”