Picture Perfect? GIPHY Acquisition Raises Competition Concerns

[Matthew U]

This thread is for the general discussion of the Article Picture Perfect? GIPHY Acquisition Raises Competition Concerns. Please add to the discussion here.

 

[Dheepa]

So, the CMA has been very busy recently. Aside from the Facebook-Giphy merger discussed here, and the Seedrs Crowdcube merger discussed in last week’s article, there’s been a string of recently announced investigations into some high profile mergers. Most notably:

1. eBay and Adevinta’s merger. Both are classified ad companies which following a review by the CMA, have agreed to sell off Gumtree and Shpock respectively. The sale of Shpock in particular is subject to an upfront buyer requirement; the CMA must approve the potential buyer beforehand.
2. Viagogo and Stubhub’s merger. The CMA has ordered a partial unwinding, requiring Viagogo to sell Stubhub’s international operations.

These are all somewhat traditional inquiries into potentially anti-competitive practices, in the sense that the CMA are predominantly scrutinising the new merged entities’ market share, potential to reduce consumer choice or increase consumer prices.

On the other hand, there have also been slightly less traditional investigations. Most recently, the CMA announced investigations into Google’s Privacy Sandbox proposals, the tech giant’s solution to privacy concerns on third party cookies. According to Google, the Sandbox essentially consists of a range of tools that will allow the company to better target consumers and offer personalised ads. The dissenting view is that the new product will actually restrict open data sharing with smaller advertising companies. Is this really a data privacy tool or just another way for Big Tech to increase its monopoly and cut out smaller companies? I’ve chosen to discuss the Google investigation here because it exemplifies a very pertinent issue, that the CMA and traditional competition laws are perhaps not entirely fit for the novel ways in which Big Tech engage in anti-competitive practices.

Effect on Law Firms

The news story here is very centred on competition law and aside from the obvious uptick in competition work, there’s not much else to add. However some interesting things to think about if you’re choosing to discuss this at interviews:

1. Is traditional competition law sufficient to deal with the various acquisitions Big Tech make? While there may be a good basis for wanting to curb the Big Tech monopoly, a better regulatory framework is definitely necessary. At the moment, the UK government’s solution is the creation of the Digital Markets Unit within the CMA. The new unit is set to have wide ranging powers that will allow it to create codes of conduct for tech companies.
2. How will a post-Brexit UK manage to stay a competitive market for tech companies with such an aggressive stance on competition issues?

As always feel free to jump in with your thoughts!

 

[Jacob Miller]

So, the CMA has been very busy recently. Aside from the Facebook-Giphy merger discussed here, and the Seedrs Crowdcube merger discussed in last week’s article, there’s been a string of recently announced investigations into some high profile mergers. Most notably:

1. eBay and Adevinta’s merger. Both are classified ad companies which following a review by the CMA, have agreed to sell off Gumtree and Shpock respectively. The sale of Shpock in particular is subject to an upfront buyer requirement; the CMA must approve the potential buyer beforehand.
2. Viagogo and Stubhub’s merger. The CMA has ordered a partial unwinding, requiring Viagogo to sell Stubhub’s international operations.

These are all somewhat traditional inquiries into potentially anti-competitive practices, in the sense that the CMA are predominantly scrutinising the new merged entities’ market share, potential to reduce consumer choice or increase consumer prices.

On the other hand, there have also been slightly less traditional investigations. Most recently, the CMA announced investigations into Google’s Privacy Sandbox proposals, the tech giant’s solution to privacy concerns on third party cookies. According to Google, the Sandbox essentially consists of a range of tools that will allow the company to better target consumers and offer personalised ads. The dissenting view is that the new product will actually restrict open data sharing with smaller advertising companies. Is this really a data privacy tool or just another way for Big Tech to increase its monopoly and cut out smaller companies? I’ve chosen to discuss the Google investigation here because it exemplifies a very pertinent issue, that the CMA and traditional competition laws are perhaps not entirely fit for the novel ways in which Big Tech engage in anti-competitive practices.

Effect on Law Firms

The news story here is very centred on competition law and aside from the obvious uptick in competition work, there’s not much else to add. However some interesting things to think about if you’re choosing to discuss this at interviews:

1. Is traditional competition law sufficient to deal with the various acquisitions Big Tech make? While there may be a good basis for wanting to curb the Big Tech monopoly, a better regulatory framework is definitely necessary. At the moment, the UK government’s solution is the creation of the Digital Markets Unit within the CMA. The new unit is set to have wide ranging powers that will allow it to create codes of conduct for tech companies.
2. How will a post-Brexit UK manage to stay a competitive market for tech companies with such an aggressive stance on competition issues?

As always feel free to jump in with your thoughts!

Really interesting thoughts Dheepa!

Competition law as a series of principles
I think the discussion surrounding tech mergers here is very interesting for a variety of reasons. When we consider that most of the UK's competition law (by my, albeit, elementary understanding), is still grounded in European law principles. This is essentially as a result of the post-Brexit transposition of substantive existing competition law into the post-Brexit landscape. With that in mind, I think it's still reasonable to pause for some (brief) consideration of the general approach of EU competition law, with reference to the appropriate Treaty of the Functioning of the European Union ('TFEU') Articles (101 through 109, largely). As with much EU law deriving from the most important Treaties (the TFEU is the only important one here, though), competition law adopts a fairly principles-based approach to contraventions. While I'm definitely not going to get into the relative advantages and disadvantages of this type of approach to law, one of the things it does facilitate is relative flexibility in application of principles to new, novel situations. I think, for the most part, this is what we're seeing with investigations such as the Sandbox investigation discussed above: application of principles to areas which never had to be investigated in the past.

Commercial implications of increased CMA interventionism in Big Tech
What will be interesting for me, and, I think, for competition specialists, is to see whether the UK chooses to substantively diverge from these principles in the mid-long term to deregulate (or just re-regulate) competition principles in the UK to increase London's attractiveness as an investment spot. There have, recently, been a series of efforts by the government to turn London into a hotspot for tech investment*. This seems in stark contrast to the CMA's apparently increasingly interventionist approach in Big Tech - it will be very interesting to see how this pans out in years to come.


*One such example was not transposing Article 17 of the Copyright Directive from EU law into the post-Brexit landscape - briefly, A17 imposed new duties and liabilities on web platforms like Facebook and YouTube to make them financially liable for any copyright infringements by their users. By not introducing this in the UK, essentially giving such providers safe harbour, it is hoped to increase tech investment in London.