Facebook was fined £ 50.5 million by the UK competition authority in the first case of its kind.
The social network has been fined for acquiring Giphy, a platform that allows people to share GIF images.
It’s just the latest in a string of regulatory questions for Facebook, which is also facing proposals to break it down and split WhatsApp and Instagram into separate businesses.
In the most recent Giphy case, Facebook was accused of failing to provide the competition watchdog with important information during the takeover.
The Competition and Markets Authority (CMA) opened an investigation into the acquisition in June last year, shortly after the transaction was announced, on concerns about a “significant reduction in competition”.
Giphy’s user-uploaded library of animated images is built-in and is widely used by the Facebook family of social media apps, but it can also be used on other platforms such as Twitter.
As part of the investigation, the social network was instructed to keep the two companies separate until a deal was reached.
Under the First Enforcement Order (IEO), Facebook is also expected to provide regular updates to the regulator to demonstrate compliance, but the CMA said the company has significantly narrowed the scope of these updates despite repeated warnings.
“Enforcement orders are an important part of the UK’s voluntary merger control regime,” said Joel Bamford, senior director of mergers at CMA.
“Companies don’t need to get CMA approval before completing an acquisition, but if they choose to merge, we can prevent further integration of the companies if we believe consumers may be affected and an investigation is needed.
“We warned Facebook that their refusal to provide us with vital information was in violation of the order, but even after Facebook lost its appeal in two different courts, Facebook continued to violate its legal obligations.
“This should serve as a warning to any company that believes it is above the law.”
Facebook responded to the fine by saying, “We strongly disagree with the CMA’s unfair decision to punish Facebook for a best-effort compliance approach that the CMA itself ultimately approved.
“We will review the CMA’s decision and review our options.”
The watchdog said this is the first time a company has breached an IEO it issued by deliberately refusing to report any required information.
Attempts by the social network to restrict the terms of the CMA’s order were previously rejected by the Competition Appeal Tribunal and Court of Appeal.
Source: Theverge