Facebook is squarely in the crosshairs of global competition regulators, but despite that scrutiny, is moving to acquire Giphy, a popular platform that lets users share images on social platforms, such as Facebook, or messaging applications, such as WhatsApp. This merger – how it is reviewed, whether it is approved, and if approved under what sort of conditions – will set a precedent that will influence not only future mergers, but also the shape of legislative reforms being actively developed all around the world. It is crucial that antitrust agencies incorporate into their processes a deep understanding of the nature of the open internet and how it promotes competition, how data flows between integrated services, and in particular the role played by interoperability.
Currently Giphy is integrated with numerous independent social messaging services, including, for example, Slack, Signal, and Twitter. A combined Facebook-Giphy would be in a position to restrict access by those companies, whether to preserve their exclusivity or to get leverage for some other reason. This would bring clear harm to users who would suddenly lose the capabilities they currently enjoy, and make it harder for other companies to compete.
As is typical at this stage of a merger, Facebook said in its initial blog post that “developers and API partners will continue to have the same access to GIPHY’s APIs” and “we’re looking forward to investing further in its technology and relationships with content and API partners.” But we have to evaluate that promise in light of Facebook’s history of limiting third-party access to its own APIs and making plans to integrate its own messaging services into a modern-day messaging silo.
We also know of one other major risk: the loss of user agency and control over data. In 2014, Facebook acquired the new messaging service WhatsApp for a staggering $19 billion. WhatsApp had done something remarkable even for the high tech sector: its user growth numbers were off the charts. At that time, before today’s level of attention to interoperability and competition, the primary concern raised by the merger was the possibility of sharing user data and profiles across services. So the acquisition was permitted under conditions limiting such sharing, although Facebook was subsequently fined by the European Commission for violating these promises.
We don’t know, at this point, the full scale of potential data sharing harms that could result from the Giphy acquisition. Certainly, that’s a question that deserves substantial exploration. User data previously collected by Giphy – such as the terms used to look for images – may at some point in the future be collected by Facebook, and potentially integrated with other services, the same fact pattern as with WhatsApp.
We must learn from the missed opportunity of the Facebook/WhatsApp merger. If this merger is allowed to proceed, Facebook should at minimum be required to keep to its word and preserve the same access to Giphy’s APIs for developers and API partners. Facebook should go one step further, and commit to using open standards whenever possible, while also making available to third parties under fair, reasonable, and nondiscriminatory terms and conditions any APIs or other interoperability interfaces it develops between Giphy and Facebook’s current services. In order to protect users from yet more tracking of their behavior, Facebook should commit not to combine data collected by Giphy with other user data that it collects – a commitment that fell short in the WhatsApp case, but can be strengthened here. Together these restrictions would help open up the potential benefits of technology integration while simultaneously making them available to the entire ecosystem, protecting users broadly.
As antitrust agencies begin their investigations of this transaction, they must conduct a full and thorough review based on a detailed technical understanding of the services, data flows, and partnerships involved, and ensure that the outcome protects user agency and promotes openness and interoperability. It’s time to chart a new course for tech competition, and this case represents a golden opportunity.