Facebook continues being ahead of the game, also continues bringing distrust from everywhere.

Source: Digital Information World

Context

GIPHY, a leader in visual expression and creation, is joining the Facebook company today as part of the Instagram team. GIPHY makes everyday conversations more entertaining, and so we plan to further integrate their GIF library into Instagram and our other apps so that people can find just the right way to express themselves. Quoted from Facebook Blog

Behind the lens #1 — Giphy’s Valuation

In 2016, Giphy’s raised $72 million in equity funding, giving a private valuation over $600 million. As a result, Giphy was bought out for cheap, due to external factors as well as the lack of acquirers — Giphy’s executives have lost most of its negotiation power.

Behind the lens #2 — Strategic Rationale

To Facebook, it is easy to draw conclusion that having Giphy in-house, ignoring Giphy’s ability to draw additional revenue to the social media giant, it is able to control Giphy’s existing service distribution, e.g limiting usage of GIFs search engine in Snapchat, Twitter and Apple’s iMessage by introducing premium plans to end-users or up-charging the company for integration permission.

To Giphy, despite its successful expansion to reach a huge amount of audience and create a network effect, the company itself is not able to create engagement between Giphy and its users nor any organic value without relying on social media platforms like iMessage and Whatsapp. Therefore, the failed business model in addition to the pandemic have provided Facebook a huge discount.

If Giphy would have been a success as an advertising business, there would have been another zero in the sale price Quoted by Michael Ostrovsky

Behind the Lens #3 — Data, Data and Data

Source: TechCrunch

In 2013, Facebook acquired the VPN app Onvao to monitor user’s interactions on Facebook and other applications like Whatsapp. Facebook gathers data from various platforms and realizes Whatsapp astounding volume of interactions, which pushes for the $19 billion acquisition that happened in 2014. Facebook shut down Onavo in 2019, after it was criticized for using code from it to collect data about people as young as 13.

However the acquisition of Giphy is different, Giphy’s API could be used to monitor iMessage’s and Snapchat activities but not extracting private information from each individual user.

According to the Verge, The GIPHY API, on the other hand, which allows for a custom-built integration, has no such requirement, and Signal explained in 2017 how GIPHY’s service can be proxied to hide all user data. Slack has already said that they proxy GIPHY in the same way, and I strongly suspect that Twitter and Apple do the same. That means that Facebook can get total usage data from these apps, but not individual user data

Source: TheVerge

Repercussion — Tech Scrutiny

Early this year, the Federal Trade Commission ordered Google, Amazon, Apple, Facebook, and Microsoft to provide information on mergers that were too small to report to antitrust regulators. Which demonstrated its interest to do their best to provide as much information about the giants to public as possible.

In May 2020, Facebook employees stage virtual walkout to protest against its execution decision not to do anything about Trump’s inflammatory posts on Facebook’s social platforms. The debate between rights of free speech and regulating misinformation/inflammatory message has continued and reflected from the protest held by its employees. Executive’s stance with Trump has implied its compliance with political leaders and disengagement with its employees as the only response they have gotten is Facebook should take a hands-off approach to what people post.

A number of occasions that Facebook should take a hands-off approach to what people post, including lies from elected officials and others in power. Quoted by Mark Zuckerberg, CEO of Facebook

Tying back to this acquisition, Facebook is likely to rise more attention from regulators about the acquisition over the next few months. However, whats the bigger picture? Witnessing how regulators have always react after a deal has been made, their understanding of potential threats to competition from mergers has always lagged behind the executives themselves and most of the time mergers that are small are completely ignored by auditors and regulators. Are there better ways to improve the current situation of regulators Fight or Flight response?

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