Facebook has been fined USD 70 million. The fine has been imposed by UK regulators. It has been imposed for deliberately not cooperating on Giphy’s acquisition investigation. The social media giant had refused to cooperate with the regulator. The company did not share information regarding the acquisition of the gif-sharing platform. After several warnings issued by the Competition and Markets Authority (CMA), the fine has been issued. Facebook had acquired Giphy last year. The financial details of the deal are not known yet. An investigation was initiated soon after the deal was signed. The watchdog was concerned that the acquisition could affect competition in various markets. Regulators have been criticised for allowing big companies to buy rivals before the make it big.
At the beginning of the investigation, an initial enforcement order or IEO was issued by the CMA. The order had prevented the transfer of assets and staff between the two companies. It also ordered not to integrate Giphy on any Facebook product. In order to make sure that the social media giant fully complies with the IEP, the regulators asked Facebook to present them with regular updates. But the company did not comply with the orders. Despite several warnings issued by the CMA, Facebook didn’t buzz. This action of Facebook forced the watchdog to consider that the company was deliberately refused to report all the required information. This failure to comply with the order resulted in the regulator issuing a USD 70 million fine.
“We warned the company on several occasions that its refusal to share important information was a breach of the order. Despite losing appeal in two separate courts, it continued to disregard legal obligations,” said senior director of mergers at CMA Joel Bamford. The company has also been fined USD 690,000 for changing its Chief Compliance Officer twice. More importantly, Facebook is the first company that has breached an IEP by the UK competition watchdog. More than a year after the investigation into the acquisition was launched, the regulators deemed the deal a threat to the social media market. It has been hinted that the deal will be blocked if felt necessary by the regulator. The fine has been levied amid reports that Facebook is planning to rebrand itself. This rebranding effort comes in the backdrop of reports that Facebook’s products harm children.