7 ms·

The "forced sale" aspect is strange to me. I can understand if the CMA could apply stipulations to the deal to address their concerns like "You must offer an A

The "forced sale" aspect is strange to me. I can understand if the CMA could apply stipulations to the deal to address their concerns like "You must offer an API to other platforms that matches your internal usage." But Giphy is a money-losing company that can't exist independently any longer. Forcing a sale to another company/investor when they have zero leverage is a negative outcome for the Giphy team and product.

ProAm 5y ago
> Forcing a sale to another company/investor when they have zero leverage is a negative outcome for the Giphy team and product. That's just business. No one says a business has to be successful or profitable.
- marketingtech 5y ago
  I'd argue it's not "just business" when a government intervenes (rightly or wrongly) in a free market outcome.
  - criddell 5y ago
    Regulations and subsequent interventions are part of the business environment. It's not that different from environmental regulations that stop companies from just dumping toxic waste in rivers. Properly disposing of waste might make a business unsuccessful.
    - bpodgursky 5y ago
      By that definition, "business environment" just describes the universe at large. Meteor strikes are part of the business environment. Nuclear war is part of the business environment. Solar flares are part of the business environment. I'm not saying it's wrong in some general philosophical sense, but you've taken a useful phrase and turned it into a useless one.
      - jazzyjackson 5y ago
        I would insist that the useless phrase is “free market” , as it implies a vacuum where government does not intervene, but what is a business but an agreement with the government to operate under certain rules?
        krapp 5y ago
        >but what is a business but an agreement with the government to operate under certain rules. Mafias can run businesses without government regulation or consent, with employees, payroll, logistics, even internal regulations - a black market is still a market.
        jazzyjackson 5y ago
        I think the Mafia is playing the role of the government in that case - deciding what the rules are, extracting fees, exacting revenge etc.
        guerrilla 5y ago
        More like a competitor with the state, since neither have a monopoly on violence at that point.
        jazzyjackson 5y ago
        Maybe I should say the government is playing the role of the mafia!
  - jkaplowitz 5y ago
    We mostly don't have a free market in the usual buzzword meaning of that term, and to whatever partial extent we do, it's replete with the kind of asymmetry in information and power that leads to economic outcomes that are both inefficient and inequitable except as corrected for with the beneficial kind of government intervention. In other words, if you want good outcomes, you sometimes need the government. (Yes, I realize the government can make things worse and not only better; this is also true of the private sector.)
    - emodendroket 5y ago
      In principle agreed but I'm not sure why Giphy essentially getting the death sentence is a positive outcome.
      - jkaplowitz 5y ago
        I said nothing about that being a positive outcome, and the CMA is not proposing to require that. They want Facebook to sell Giphy to a suitable buyer, not to spin it back out as independent.
  - danielheath 5y ago
    “Free Market” was a term coined to refer to a market free of rent-seeking gatekeepers. How far language has shifted, that it has instead become a term to refer to a market where nobody removes them.
  - Terretta 5y ago
    > not “just business” when a government intervenes in a free market outcome Like telling Apple it’s not allowed to vertically integrate its mobile appliance or guarantee a curated walled garden as part of its market offering.
  - kesselvon 5y ago
    A free market is not a market free of regulation. Adam Smith was pretty explicit that markets can't exist without regulation as without uniform rules of engagement and the trust that creates in the system, there is no free market.
- chrisseaton 5y ago
  > That's just business. Just people's incomes, livelihoods, pensions, etc.
  - edgyquant 5y ago
    Yes. This can be said about any business as all business are made up of people.
    - RNCTX 5y ago
      No, businesses are people, except when those people have committed crimes and are management, in which case they are inhabitants of a special purgatory that allows them to continue to use the world unabated, but prevents the world from contacting them.
      - edgyquant 5y ago
        No what you’ve just said is an oft repeated falsehood. Businesses, as entities, enjoy some of the rights, and responsibilities, that natural citizens do. https://en.wikipedia.org/wiki/Corporate_personhood https://en.wikipedia.org/wiki/Corporate_personhood
- TuringNYC 5y ago
  I'll note as an ex-CoFounder/CTO that the scrutiny over FAANG acquisitions are throwing the baby out with the bathwater. 1. These are great ways to create and be able to cash out for founders 2. These are great ways to grow something you cannot because small companies dont have as much money, and because jumping from one VC round to the next is very risky. 3. Many of these companies create immense global value and could not possibly have gotten to where they are w/o the resources of a FAANG (think YouTube, WhatsApp) -- and if you think otherwise, where are the competitors? (I mean...this isnt like cell phone contracts, you can switch chat clients or video streaming sites easily)
  - deleted 5y ago
    [deleted]
  - g_p 5y ago
    > Many of these companies create immense global value and could not possibly have gotten to where they are w/o the resources of a FAANG (think YouTube, WhatsApp) -- and if you think otherwise, where are the competitors? (I mean...this isnt like cell phone contracts, you can switch chat clients or video streaming sites easily) Something that the CMA has recently become incredibly aware of is the power of network effects (and how they can be used to create a moat around one innovative and well-funded early-mover that prevents another equally innovative company from succeeding in the same way). Especially where the network effect is used with deliberate non-interoperability in mind (chat clients, and the corresponding protocols that all originated from XMPP, but diverge sufficiently to prevent interoperability, as an example), they seem increasingly interested in the competition factors at play, as it allows one dominant player to entrench that dominance and can lead to an uncompetitive marketplace. Where default settings are used to win marketshare across markets (see browser defaults, search defaults, etc.), this is one of the specific areas they like to investigate and act on. At a recent talk, one of the heads of the CMA explained their goal here - it isn't to ruin the tech sector, but rather to ensure that new and innovative tech companies can succeed today, and in the future, without today's entrenched tech players having a de-facto veto on their success, or the ability to acquire and sink or subsume them. The CMA doesn't want to see innovative new companies forced to get the permission of entrenched players (through platform business models and other control-yielding constructs we see being created today) to innovate - this is one of the reasons they're also looking very closely at Apple and their app store platform model, since it disallows competition and has been designed to give them a self-selected (not free-market) rent that helps them maintain their position. Decoupling the lock between the phone and the app store platform would force price competition and lead to new and innovative options, and a more dynamic market. While this seems an unpopular view in the tech world, it's probably worth contextualising that in 2012, the average lifespan of an S&P 500 listed company was 15 years, and this has been falling since the 1920s... Today's tech giants shouldn't last forever, and newer S&P companies tend to out-perform older ones. A dynamic market that doesn't allow FAANMG to try to preserve themselves forever will likely see more growth and opportunities in the long run. Ref: https://www.bbc.co.uk/news/business-16611040 https://www.bbc.co.uk/news/business-16611040
- whoisjuan 5y ago
  If the government forces you to reverse an acquisition of an asset that loses money in isolation, that's not just business. That's a populist government intervention without any sound financial reasoning. If Giphy had filed a Chapter 11 in the US and Company Voluntary Arrangements in the UK, to be then bought by FB, would the UK government be even scrutinizing this? In this case this sets precedent that no other social media operation can buy Giphy. Who else could buy it and somehow make it work as a losing money asset in that case? This is essentially the government saying: "you have to sell this back to someone but you cannot sell it to other social media companies, so you probably have to sell it for pennies to some private equity or shut it down". In what free market economy does that make sense at all? Luckily FB can afford to lose 400MM, but what a horrible precedent this sets for the M&A activity in the tech industry.
  - cratermoon 5y ago
    > without any sound financial reasoning. Who says that "financial reasoning" trumps other concerns, like privacy, accessibility, or human rights? Reducing everything to financial gain/loss analysis may sound nice in your Accounting 101 class, but in the real world people exist.
    - whoisjuan 5y ago
      This a company that hosts and distributes GIFs. It's hard for me to see how does an acquisition of a GIF company has human rights concerns. Even the CMA's statement is focusing solely on competition concerns. I'm not dismissing any other potential concerns that may arise from this, but I fail to see how this isn't just a case of "FB bad so let's fuck with FB". Someone already mentioned it here, but why didn't Google's acquisition of Tenor received similar scrutiny? Just to be clear, I'm not arguing in favor of FB or anyone. My argument is against governments disrupting free market through unfalsifiable hypotheses of how an acquisition is gonna unwind and impact the competive landscape. In this particular case it's clear to me that financial reasoning is needed to force the reversal of an acquisition.
      - cratermoon 5y ago
elliekelly 5y ago
> But Giphy is a money-losing company that can't exist independently any longer. Says who? And even if they couldn’t exist independently they could still be acquired by another company.
koolba 5y ago
Wouldn’t the team have already converted their Giphy scrip to liquid Facebook stock as part of the original acquisition?
- jejeyyy77 5y ago
  Yes. This decisions would be Facebook’s loss

ProAm 5y ago

> Forcing a sale to another company/investor when they have zero leverage is a negative outcome for the Giphy team and product. That's just business. No one says a business has to be successful or profitable.

marketingtech 5y ago
I'd argue it's not "just business" when a government intervenes (rightly or wrongly) in a free market outcome.
- criddell 5y ago
  Regulations and subsequent interventions are part of the business environment. It's not that different from environmental regulations that stop companies from just dumping toxic waste in rivers. Properly disposing of waste might make a business unsuccessful.
  - bpodgursky 5y ago
    By that definition, "business environment" just describes the universe at large. Meteor strikes are part of the business environment. Nuclear war is part of the business environment. Solar flares are part of the business environment. I'm not saying it's wrong in some general philosophical sense, but you've taken a useful phrase and turned it into a useless one.
    - jazzyjackson 5y ago
      I would insist that the useless phrase is “free market” , as it implies a vacuum where government does not intervene, but what is a business but an agreement with the government to operate under certain rules?
      - krapp 5y ago
        >but what is a business but an agreement with the government to operate under certain rules. Mafias can run businesses without government regulation or consent, with employees, payroll, logistics, even internal regulations - a black market is still a market.
        jazzyjackson 5y ago
        I think the Mafia is playing the role of the government in that case - deciding what the rules are, extracting fees, exacting revenge etc.
        guerrilla 5y ago
        More like a competitor with the state, since neither have a monopoly on violence at that point.
        jazzyjackson 5y ago
        Maybe I should say the government is playing the role of the mafia!
- jkaplowitz 5y ago
  We mostly don't have a free market in the usual buzzword meaning of that term, and to whatever partial extent we do, it's replete with the kind of asymmetry in information and power that leads to economic outcomes that are both inefficient and inequitable except as corrected for with the beneficial kind of government intervention. In other words, if you want good outcomes, you sometimes need the government. (Yes, I realize the government can make things worse and not only better; this is also true of the private sector.)
  - emodendroket 5y ago
    In principle agreed but I'm not sure why Giphy essentially getting the death sentence is a positive outcome.
    - jkaplowitz 5y ago
      I said nothing about that being a positive outcome, and the CMA is not proposing to require that. They want Facebook to sell Giphy to a suitable buyer, not to spin it back out as independent.
- danielheath 5y ago
  “Free Market” was a term coined to refer to a market free of rent-seeking gatekeepers. How far language has shifted, that it has instead become a term to refer to a market where nobody removes them.
- Terretta 5y ago
  > not “just business” when a government intervenes in a free market outcome Like telling Apple it’s not allowed to vertically integrate its mobile appliance or guarantee a curated walled garden as part of its market offering.
- kesselvon 5y ago
  A free market is not a market free of regulation. Adam Smith was pretty explicit that markets can't exist without regulation as without uniform rules of engagement and the trust that creates in the system, there is no free market.
chrisseaton 5y ago
> That's just business. Just people's incomes, livelihoods, pensions, etc.
- edgyquant 5y ago
  Yes. This can be said about any business as all business are made up of people.
  - RNCTX 5y ago
    No, businesses are people, except when those people have committed crimes and are management, in which case they are inhabitants of a special purgatory that allows them to continue to use the world unabated, but prevents the world from contacting them.
    - edgyquant 5y ago
      No what you’ve just said is an oft repeated falsehood. Businesses, as entities, enjoy some of the rights, and responsibilities, that natural citizens do. https://en.wikipedia.org/wiki/Corporate_personhood https://en.wikipedia.org/wiki/Corporate_personhood
TuringNYC 5y ago
I'll note as an ex-CoFounder/CTO that the scrutiny over FAANG acquisitions are throwing the baby out with the bathwater. 1. These are great ways to create and be able to cash out for founders 2. These are great ways to grow something you cannot because small companies dont have as much money, and because jumping from one VC round to the next is very risky. 3. Many of these companies create immense global value and could not possibly have gotten to where they are w/o the resources of a FAANG (think YouTube, WhatsApp) -- and if you think otherwise, where are the competitors? (I mean...this isnt like cell phone contracts, you can switch chat clients or video streaming sites easily)
- deleted 5y ago
  [deleted]
- g_p 5y ago
  > Many of these companies create immense global value and could not possibly have gotten to where they are w/o the resources of a FAANG (think YouTube, WhatsApp) -- and if you think otherwise, where are the competitors? (I mean...this isnt like cell phone contracts, you can switch chat clients or video streaming sites easily) Something that the CMA has recently become incredibly aware of is the power of network effects (and how they can be used to create a moat around one innovative and well-funded early-mover that prevents another equally innovative company from succeeding in the same way). Especially where the network effect is used with deliberate non-interoperability in mind (chat clients, and the corresponding protocols that all originated from XMPP, but diverge sufficiently to prevent interoperability, as an example), they seem increasingly interested in the competition factors at play, as it allows one dominant player to entrench that dominance and can lead to an uncompetitive marketplace. Where default settings are used to win marketshare across markets (see browser defaults, search defaults, etc.), this is one of the specific areas they like to investigate and act on. At a recent talk, one of the heads of the CMA explained their goal here - it isn't to ruin the tech sector, but rather to ensure that new and innovative tech companies can succeed today, and in the future, without today's entrenched tech players having a de-facto veto on their success, or the ability to acquire and sink or subsume them. The CMA doesn't want to see innovative new companies forced to get the permission of entrenched players (through platform business models and other control-yielding constructs we see being created today) to innovate - this is one of the reasons they're also looking very closely at Apple and their app store platform model, since it disallows competition and has been designed to give them a self-selected (not free-market) rent that helps them maintain their position. Decoupling the lock between the phone and the app store platform would force price competition and lead to new and innovative options, and a more dynamic market. While this seems an unpopular view in the tech world, it's probably worth contextualising that in 2012, the average lifespan of an S&P 500 listed company was 15 years, and this has been falling since the 1920s... Today's tech giants shouldn't last forever, and newer S&P companies tend to out-perform older ones. A dynamic market that doesn't allow FAANMG to try to preserve themselves forever will likely see more growth and opportunities in the long run. Ref: https://www.bbc.co.uk/news/business-16611040 https://www.bbc.co.uk/news/business-16611040
whoisjuan 5y ago
If the government forces you to reverse an acquisition of an asset that loses money in isolation, that's not just business. That's a populist government intervention without any sound financial reasoning. If Giphy had filed a Chapter 11 in the US and Company Voluntary Arrangements in the UK, to be then bought by FB, would the UK government be even scrutinizing this? In this case this sets precedent that no other social media operation can buy Giphy. Who else could buy it and somehow make it work as a losing money asset in that case? This is essentially the government saying: "you have to sell this back to someone but you cannot sell it to other social media companies, so you probably have to sell it for pennies to some private equity or shut it down". In what free market economy does that make sense at all? Luckily FB can afford to lose 400MM, but what a horrible precedent this sets for the M&A activity in the tech industry.
- cratermoon 5y ago
  > without any sound financial reasoning. Who says that "financial reasoning" trumps other concerns, like privacy, accessibility, or human rights? Reducing everything to financial gain/loss analysis may sound nice in your Accounting 101 class, but in the real world people exist.
  - whoisjuan 5y ago
    This a company that hosts and distributes GIFs. It's hard for me to see how does an acquisition of a GIF company has human rights concerns. Even the CMA's statement is focusing solely on competition concerns. I'm not dismissing any other potential concerns that may arise from this, but I fail to see how this isn't just a case of "FB bad so let's fuck with FB". Someone already mentioned it here, but why didn't Google's acquisition of Tenor received similar scrutiny? Just to be clear, I'm not arguing in favor of FB or anyone. My argument is against governments disrupting free market through unfalsifiable hypotheses of how an acquisition is gonna unwind and impact the competive landscape. In this particular case it's clear to me that financial reasoning is needed to force the reversal of an acquisition.
    - cratermoon 5y ago

elliekelly 5y ago

> But Giphy is a money-losing company that can't exist independently any longer. Says who? And even if they couldn’t exist independently they could still be acquired by another company.

koolba 5y ago

Wouldn’t the team have already converted their Giphy scrip to liquid Facebook stock as part of the original acquisition?

jejeyyy77 5y ago
Yes. This decisions would be Facebook’s loss