The social media giant bought the looping videos platform last month. The deal was reportedly valued at $400 million.
CMA wants to determine if the acquisition could thwart competition in the UK.
The Competition and Markets Authority (CMA) is considering whether it is or may be the case that this transaction has resulted in the creation of a relevant merger situation under the merger provisions of the Enterprise Act 2002 and, if so, whether the creation of that situation may be expected to result in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services.
Facebook has been served with an initial enforcement order. For the duration of the investigation, Facebook and GIPHY are to operate independently. Facebook has been instructed to not go ahead with any steps related to the merger, such as integration of technologies or staff transfer. Both Facebook and GIPHY have agreed to comply.
The competition watchdog has also invited comments from third parties on the deal.
Previously, the Australian Competition & Consumer Commission had also announced a similar investigation
to determine whether the takeover will give Facebook access to data that could amplify its power in any markets or allow it to obtain data on rivals that could be unhealthy for competition.
Facebook insists that data was not the motivation behind the GIPHY deal
Facebook plans to integrate Giphy into Instagram. When the deal was announced, the company had said that GIPHY's repository of GIFs will continue to operate separately. It had also claimed that data is not the motivation behind the deal and that the animated pictures platform has little user data anyway.
Whether the CMA and ACCC buy that remains to be seen.