UK regulator set to block Meta's Giphy deal
reuters.com
reuters.com
Would be great not to have six chat apps open all the time.
Does one encryption scheme have to mandated as the standard scheme?
okay
> There’s zero benefit to consumers, and a lot of harm.
There's a ton of potential societal benefit in centralization and/or monopoly in theory. There's also a ton of potential downside. What in particular makes this fall in the latter bucket?
You could argue that features can make it easier across products, but each product would be big enough on their own to develop these features at little cost compared to their income. Apart from that there's no potential upside I can see for a user to have these products under one company.
The same applies to Giphy. Right now, messenger companies don't own Gif companies and it's still very easy to use them together. I don't see the benefit here for a user to have them owned by the same company.
Common-ish arguments for monopolies, as applied to this situation:
* potentially the interoperability you indicate
* infrastructure investment leading to stability
* similarly: best in class client side software
* security / privacy guarantees (yes. I know, ironic, etc. but the fully distributed multi-company alternative is likely worse on these dimensions)
* single point of accountability for the state and law enforcement. (yes. not likely a HN concern. Still valuable to the state and potentially regular consumers.)
* general pro monopoly argument: fewer resources are wasted in competition, and so can be applied to product development and research. i.e. bell labs
IDK how I feel the scales tip in this case, but treating it as cut and dry feels a bit naive.
Strong +1 on the ensuing twisted incentives.
If anything, being a centralised conglomerate makes them less stable, less secure. And with less competition, they actually become more wasteful.
I.e. It’s nontrivial to be more wasteful than it would be to have multiple teams duplicating the same product.
(Strong disagree on your suggestion that the centralisation generally makes them less stable/secure, but granted on the tail risks.)
You are arguing for Central Planning. You can't be pro-free market and pro monopoly.
At least government monopoly is theoretically accountable to the voters.
Downsides:
* Higher risk - a bigger database to attack.
* A very big single point of failure
* Slows down innovation
* Less private
Upsides (for society):
* ???
Usually we dont ask "What in particular makes this fall in the latter bucket?"
> but if you've got three broken companies and you fix one of them, you've now only got two broken companies to fix.
Now, we've to somehow decide the order. I say with start at Amazon, the parent will say Facebook and someone else will say Apple. We are back to square one. Therefore, my suggestion was to take uniform and consistent action. Not, go after one organisation because of popularity.
Unless your suggestion is to do them all simultaneously? But then who's going to synchronize all the hearings to make sure all the judges hit their gavels at the same time? And if one company stalls, won't that stop any action on any of them?
That wasn't my suggestion, really. The parent comment said that "We should start at Facebook". I facetiously said, "We can also start at Amazon or Apple".
> Unless your suggestion is to do them all simultaneously? But then who's going to synchronize all the hearings to make sure all the judges hit their gavels at the same time? And if one company stalls, won't that stop any action on any of them?
Good questions! What's your solution?
Now you've given the other two companies more of the market share. Not only that you've given them time to lobby and protect themselves.
So you've now reduced competition even more.
You are trying to fix the wrong problem. The problem is the market, not facebook.
Maybe the problem is the political system that lets corporations make the government do whatever the heck they want.
Problems with Facebook, et al, are symptoms of bad legislation. By focusing energy on "fixing" the companies, we risk losing sight of the institutional failures that allowed them to become a problem.
- Nam Nguyen, who is the head of engineering at Instagram. He would remain head of engineering at the standalone Instagram. Maybe he'd get a cosmetic change to his job title like CTO or something.
- Ashley Yuki is the head of product at Instagram. Same with her, she'll stay head of product. They aren't going to fire and replace her just because Instagram trades under $GRAM instead of $FB.
Repeat this down the line for the rest of the people that run Instagram. Instagram will literally be the same product, with the same owners, same management, and same business model.
I'm doubtful if there is any material harm in those companies being under the same roof, and the benefit to consumers may just be that they are free services, but that doesn't have to be demonstrated.
They are not essential services, it's better to just not use them if you don't like them.
Where there needs to be more regulation is in Search Monopoly, Search Result Transparency, App Store Monopolies etc. - there are serious consumer and industry issues there.
"The acquirer may quickly take steps to consolidate its investment by removing the parts of its own business that compete with the target. If the CMA were prevented from making orders that impinged on the acquirer's existing business, divestiture at the end of a relatively lengthy process would, by itself, be incapable of either restoring the status quo at the time of the merger or protecting competition in the relevant market."
It looks like the CMA have the right to roll things back as if the merger never took place to the detriment of the acquirer (Facebook). Its likey Giphy won't suffer any losses, rather Facebook will be forced to compensate it, prehaps the plan all along for the VCs :P
Ben Thompson explained why it’s not a monopoly well:
Well, he was referencing a bunch of sources, including courts rejecting those pesky regulators cases. I could have cited the courts, but BT's writing is a lot easier to read and cites the courts.
> we are all good and we can cut on all these pesky regulators.
Who's case was thrown out (in the US) for not having any basis for their claim. Its basically the same claim as all HN. Its big, so its a monopoly. Except there is no fact basis for it. They don't have a dominant market share.
> the FTC has failed to plead enough facts to plausibly establish a necessary element of all of its Section 2 claims — namely, that Facebook has monopoly power in the market for Personal Social Networking (PSN) Services. The Complaint contains nothing on that score save the naked allegation that the company has had and still has a “dominant share of th[at] market (in excess of 60%).”
https://storage.courtlistener.com/recap/gov.uscourts.dcd.224...
After: FB now owns the market; how did we let them become a monopoly!?
Before: FB doesn't own the market.
During review: FB would (/not) own the market with this acquisition. So we should deny (/approve) the acquisition.
After: Look the outcome we expected!
Much later: wow things change over time!
The original comment said monopoly, not anti competitive behavior. They are different, you're right.
> They don't need a de facto monopoly to have an adverse effect on competition or their consumers/users.
True. That said, i'd argue facebook actually has a positive affect on competition in their space. They're regularly rolling out new features and making changes due to competitive forces, meaning others compete on better experience rather than just different.
Eg. FB copied snapchat stories... and snapchat had nothing to stay relevent. FB copied tiktok format and TT is stronger than ever, since TT's advantage wasn't the format but the algorithm.
Facebook makes money from mining the data you generate while using their platform.
If you're not using _their_ platform, you're not making _them_ money.
To combat WhatsApp and Instagram, Facebook tried the Facebook App. It didn't work (people still used WhatsApp and Instagram a great deal more than the facebook app). Instead of figuring out why, they just bought the platforms out and forcefully integrated them.
Which clearly violates the Clayton Act.
"But why didn't the FTC intervene" because old people don't understand tech and new things will always confuddle the outgoing gatekeepers.
Those purchases gave them data they previously didn't have access to. Which gave them MUCH more control in the advertising market.
I expect boomers and the like to not understand this, but to hear "facebook isn't a monopoly" on HN is fascinating.
How else do you describe the centralisation of the internet via Google and Facebook? Innovation? Really? Despite all the evidence in leaks and statements?
Google exists and Amazon and Microsoft have growing advertising businesses. All of which have vast throves of integrated consumer data.
https://en.wikipedia.org/wiki/Clayton_Antitrust_Act_of_1914
> There are 4 sections of the bill that proposed substantive changes in the antitrust laws by way of supplementing the Sherman Antitrust Act of 1890:
> mergers and acquisitions where the effect may substantially lessen competition (Act Section 7, codified at 15 U.S.C. § 18) or where the voting securities and assets threshold is met (Act Section 7a, codified at 15 U.S.C. § 18a);
> But why didn't the FTC intervene
The US did review the case, and determine that insta was not a risk. Its easy in hindsight to say that its obviously a miss, but again, we don't actually know that insta would be big today if it wasn't for the fb resources and industry knowledge they brought.
> Which gave them MUCH more control in the advertising market.
What market share do they have in advertising? Like a number, because between Google, and Amazon, and all the other major networks (oracle, adobe, msft, apple, etc) i can't imagine its so high they can exert a dominating force.
> I expect boomers and the like to not understand this
I'm young and love to disparage old people and the internet, but really age is not an indicator of people understanding things, even the internet. Plenty of boomers "get it", and maybe get business more than some hn commenters... ;)
> but to hear "facebook isn't a monopoly" on HN is fascinating
Review the source linked. It explains clearly that fb doesn't have a dominant market share. Thats what a monopoly is. Its a very HN source.
> How else do you describe the centralisation of the internet via Google and Facebook? Innovation? Really? Despite all the evidence in leaks and statements?
1 ) this is quite an emotional response, that does nothing for the legal basis of a monopoly. Emotional responses are fine, centralization can be scary, but its not a legal response.
2) I wouldn't call it innovation per se, nor would i call it good, per se. BUT i wouldn't call it monopoly either.
aside, i wonder if the internet is really "centralizing" resulting in fewer locations online, or if some locations have just grown so much bigger than others - are there fewer nodes in the graph over time, or did some nodes just grow a lot more.
--- --- ---
Also, not to nit-pick but...
1. Whats app does not collect much user data, so it doesn't really help the "we make money off your data" argument.
2. Using a fb site does not mean you can't use other social networks. They don't compete in a "rivalrous" way - meaning using insta doesn't stop you from using tikTok or youtube or any other network in addition to fb.
They would have to find a suitable buyer, and presumably if Giphy has been gutted then it's worth considerably less than Meta paid.
Such (as in: requiring regulatory approval in general, as I cannot legally speak to this deal specifically) takeover deals are structured with a suspensive condition, pending regulatory approval. Until that condition is met, it remains pending and without effect.
I stuck with law right now, talked to a lot of people. I do work that leaves me enough free time so as to satisfy my other interests, learn more about it, and if after like maybe 1 year I feel confident enough to switch, I'll do it. Right now I'm content with that situation. How about you?
They're buying analytics access to further enable them to profile their users, sell that as an advertising platform.
Instagram, WhatsApp give deep profiles into their users but they're pretty up front about what they can do. CDNs need to be treated in special ways. They can leak information back to someone like FB and deanonymise activity.
> Facebook controls 40 to 50 per cent of the UK display advertising market according to the CMA. Giphy had offered paid advertising in the US and the CMA argued that, absent the merger, Giphy could have gone on to expand that service into the UK — something the company has denied.
I'm guessing its related to this point.
However,
> . In a response to the CMA’s provisional findings Meta accused the watchdog of “engaging in extraterritorial over-reach”
And yet the EU is also doing the same,
> In Brussels, EU officials are looking at new ways to examine mergers that fall outside their scope on the basis of revenues alone
In practice, I don't know what the reality of this will mean. Does Giphy continue to operate as a separate company in the UK then? How's that going to work?
If companies don't want to comply with UK regulation they are, of course, free not to participate in the UK market.
1. The acquisition was >1 year ago. (And there's some question of whether FB followed the correct process.)
2. The antitrust concern is in one major market with a ton of political and regulatory power — but still one of many. (Are there international trade agreements that inherently make this ruling impactful outside of the UK?)
3. The acquired company was very unlikely to find a better outcome, and would have been fairly likely to require costly restructuring for lack of this one.
I don't take this super seriously — because giphy feels replicable and, well, it's gifs. But curious if anyone else sees impactful competitive/strategic concerns, or if the matter at hand is really just political precedent setting.
Mostly I feel bad for giphy people. Hope they're nicely contractually protected.
And on competition - will anyone else be interested in GIFs if the dominant social network owns the market leader?
There are more than questions - FB was found guilty and fined for not following the correct process.
> He added: “We warned Facebook that its refusal to provide us with important information was a breach of the order but, even after losing its appeal in two separate courts, Facebook continued to disregard its legal obligations. This should serve as a warning to any company that thinks it is above the law.”
Good thing brexit has prevented the UK from all those crazy euro rules and regulations.
> "At that time the CMA argued Meta could cut off its rivals’ access to gifs, and demand platforms like TikTok or Snapchat hand over more of their data in order to access gifs, consolidating power in Meta’s hands."
It... it seems like that may be a fair summary of the regulator's concern :/
Zuckerberg is ruthless in his determination to own all the funny gifs and good times.
It’s not fair cause nothing will be left for Twitter, making it all just people yelling at each other and no one laughing at funny cats and memes.
If this deal is not stopped then Zuckerberg will have bought much of the worlds supply of laughs. He’s shown he’s willing to use those laughs against us.
It’s a dystopian future that I’m glad the UK is standing up against. Thank god there’s a democracy that stands against such devastating overreach.
We suspect zuckerberg’s grand plan is to lock away all the worlds laughs in a big vault so no one can get them, and finally the world will be under his control. Unless The Incredibles are sent in to Facebook headquarters to break in and steal the worlds sense of humor back.
We haven't explored the geopolitical angle yet either. What are the national security implications of choking off TikTok's critical gif supply? The regulator may have had unspoken trade war concerns.
It’s too silly for words really.
It’d be a Monty Python sketch except it’s real.
Or a children’s story in which the wicked witch steals all the worlds smiles and no one can smile again until the spell is broken.
Only in the UK.
The only thing more ridiculous than Facebook not being allowed to buy the funny picture company, is the fact that Facebook is spending $400,000,000 on a funny picture company.
Layer upon layer of crazy.
It's nothing to do with a "funny picture company" and $400 million was a good price for what they got.
The fact you don't understand that is a you problem.
It might be wryly amusing when capitalists act like comic book villains, but that's a terrible reason to let them do it.
(...isn't the crazed rent-seeking capitalist a comic book villain trope for a reason?)
Giphy is integrated in smartphone keyboards for hundreds of millions of devices, and it is a fast track to a large trove of personal data for Facebook.
greed has overfloweth, lack of any moral compunction is the rule of the game.
fine but this usually bites back in ways not immediately obvious. so don't ask why the world is going to hell one crisis at a time.
* Has become an international affair where not just big but small countries expect a veto.
* Is not predictable. This and other deals have been approved in some jurisdictions but then refused in others. And without apparent reason why what is a monopoly in one place isn't in others.
* Take very long periods of time (this deal was first announced on may 2020, didn't get provisional refusal until August 2021 and now is still uncertain).
Imagine trying to run a company for 18 months while your existence and entire future is entirely down to the flip of a coin.
Imagine the possibility for corruption and nepotism and backroom deals.
I'd really like to see some simplification in this area before it goes bad.
The Arm NVidea acquisition is just as bad. Publicly announced over a year ago. Europe just opened an investigation. What have they been doing for a year? What happens when someone in that office let's drop that for 0.1% of the deal price he can make it happen, or they can wait another few years for a preliminary refusal?
Small countries have the right to control what happens in their own markets too.
> * Is not predictable. This and other deals have been approved in some jurisdictions but then refused in others. And without apparent reason why what is a monopoly in one place isn't in others.
Different countries have different laws.
> * Take very long periods of time (this deal was first announced on may 2020, didn't get provisional refusal until August 2021 and now is still uncertain).
It takes time to gather data etc.
> Imagine trying to run a company for 18 months while your existence and entire future is entirely down to the flip of a coin.
It's not the flip of a coin.
Atm / Nvidia is not great but the regulatory risk was entirely predictable and clearly Softbank was prepared to take that risk. Personally, I think it should be blocked and quickly.
https://www.gov.uk/government/news/cma-fines-facebook-over-e...
To say this needs to happen for all future deals is extreme.
Giphy strikes me of being one of those 'your product is actually a feature' companies.
I totally stopped using Giphy after this acquisition. It isn't as bad as outright buying messaging platforms or social networks, but it let FB reach into areas they otherwise would never have visibility such as android keyboards and slack channels.
With Giphy, you embed a gif from your Android keyboard and FB recieves your IP and puts a uid on the gif. Just like a tracking pixel, when your recipient views the image FB now has their IP and knows you both communicate. Using the IPs as lookups they can now make a friend suggestion in FB without any activity having taken place in that product.
In reality the fingerprinting is more sophisticated than IP but the idea is the same.
This is not beneath FB, it is the lifeblood of their business. Number of friends is a key metric. They know if they can ratchet that number up then you will use the platform more. Which is why they paid so much for Giphy which otherwise has no business model or path to profitability.