Sunday, November 28, 2021

Facebook fined $70 million for withholding information about Giphy acquisition

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The U.K.’s competition regulator fined Facebook Inc. 50.5 million British pounds, equivalent to approx. $70 million, alleging it breached reporting requirements during a continuing review of its proposed takeover of Giphy, a provider of animated images for use in social media.

The Competition and Markets Authority(CMA) alleges that the social media giant deliberately withheld information related to the $400 million purchase of the popular GIF repository, which it announced in May last year.

As per the CMA, Facebook has failed to follow the standard oversight process — failing to provide the regulator with required information related to an initial enforcement order (IEO) placed on it by the watchdog, despite repeated requests for it to do so.

In June 2020, the CMA had issued an initial enforcement order (IEO) to Facebook after it announced the Giphy acquisition. These types of orders prevent companies from merging while an investigation is ongoing. The companies would require to function as they would have without the merger for as long as the investigation isn’t complete.

As part of this process, Facebook was required to provide regular updates to the CMA about its compliance with the IEO. However, the CMA alleges that the company “significantly limited the scope of those updates”. It didn’t budge despite repeated warnings from the regulatory body, deliberately refusing to report all the required information.

This is the first time the UK competition regulator has found a company consciously refusing to comply with such orders. As a result, the CMA has now issued a £50 million fine to Facebook. It has also fined the company another £500,000 for swapping its Chief Compliance Officer twice without permission during the investigation. The CMA says it’s a major breach that “fundamentally undermined its ability to prevent, monitor and put right any issues.”

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The tech giant was also criticised last year by the Competition Appeal Tribunal and Court of Appeal over its lack of cooperation with the CMA — with judges calling it out over what they suggested “might be regarded as a high-risk strategy” in relation to not complying with the IEO and not keeping the CMA updated as the order required.

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Astitva Patle
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