What Facebook's Giphy deal means for Snapchat, Twitter, Gif-makers and data watchdogs
If there were a reaction Gif out of Facebook headquarters should its deal to buy Giphy be approved, it would be Jesse Eisenberg as Mark Zuckerberg in the movie "The Social Network" celebrating a new hire with a handshake: "Welcome to Facebook." Or it could be the Gif of a closeup of DJ Khaled pointing confidently at the camera mouthing his triumphant catchphrase, "Another one."
If the reaction were from Facebook rivals like Snapchat and Twitter, it could be any Gif of Ryan Reynolds acting exasperated, rolling his eyes and throwing his head back in disbelief: "Not again."
Then there is the reaction of the Federal Trade Commission. It is unknown how regulators will view the first major acquisition by the social network under a new oversight regime, but privacy watchdogs say that the proposed deal raises privacy and competition concerns.
On Friday, Facebook announced that it agreed to buy Giphy, a company that is one of the main sources of reaction Gifs shared on millions of mobile devices. Axios first reported the deal, which could cost $400 million.
Here is what the deal means, and why some data and privacy experts say it gives Facebook a powerful new weapon to wield against rivals:
What is Giphy?
The company was founded in 2013 as a site where people could search for Gifs, a video format that has become a popular medium for online communication. Giphy is one of the biggest repositories of Gifs, claiming it serves 10 billion pieces of content a day. It also reaches 700 million users through its partnerships with other apps, including Snapchat, Twitter, Slack, Skype and Telegram.
What will Facebook do with Giphy?
"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," Vishal Shah, VP of product at Facebook, in a blog post about the proposed deal.
Facebook said that 50 percent of Giphy's traffic already comes from Facebook, Instagram, Messenger and WhatsApp. Facebook also promises that Giphy will still be open to the third-party apps like Twitter and Snapchat.
Should Giphy partners worry?
Yes, according to developers and app experts, who say that Giphy gives Facebook a new source of data on competitors.
Sam McRoberts, CEO of VUDU marketing, says that Giphy is integrated into a lot of Facebook rivals. Giphy is a fixture in many mobile apps, "especially on Twitter and likely on many websites and blogs that use the embeds in their content," McRoberts says.
What edge can Facebook really get?
"If Facebook is allowed to complete this acquisition, Facebook will not only be ingesting user data across all the major social networks that have previously kept Facebook off their systems, particularly Twitter," says Zach Edwards, who is the founder of Victory Medium and an outspoken privacy advocate, "but they will also be in control of the only major animated-Gif sharing service, and can use this monopoly power against their competitors, most of whom are Giphy clients."
McRoberts says Giphy helps Facebook in its advertising, too. "I assume they’ll use this acquisition to augment their ad targeting database," McRoberts says, "and perhaps also display ads within the Giphy embeds potentially placing ads on sites who never intended that to be the case."
They're just Gifs. What’s the big deal?
A Facebook spokesman said that sharing a Gif is like sharing a link to a website and did not pose any deeper privacy concerns. There are no pixels, cookies or other tracking methods embedded in Gifs, the spokesman said.
That does not mean partners like Twitter will continue to enable Giphy content. These relationships are tricky. In 2012, after Facebook bought Instagram, it disabled sharing photos to Twitter. Twitter made an early decision to prevent Instagram users from finding friends through Twitter.
Snapchat and Twitter declined to comment on whether they would continue to work with Giphy.
What does this mean for Gif-makers?
"This a great opportunity for Giphy and content creators," says Glenn Woods, social media manager at TV One, who makes Gifs out of TV clips from the network. "The Giphy platform allows for our content to live longer than it might on air and truly allows our content to be a part of everyday conversation."
Woods says TV One’s Gifs have generated 2.5 billion views thanks to the sharing on Twitter and elsewhere.
Under Facebook, Giphy could improve the services it provides media partners, Woods says. For instance, Facebook could supply more data and analytics to the Gif-makers about how the video clips perform online.
Is the deal done?
The Federal Trade Commission still gets to review the trade. This year, Facebook signed a new agreement with the regulators after paying the largest fine in FTC history, $5 billion. That was for Facebook's role in Cambridge Analytica, the third-party data firm that misused data on close to 90 million Facebook users.
Now, Facebook works under a consent decree that means all its moves must adhere to stricter privacy and transparency rules. The FTC declined to comment for this story, but its rules mandate that any deal worth more than $94 million comes under review.
Facebook critics already argue against the deal. "If I were a regulator, I’d 100 percent block this acquisition," McRoberts says.