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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 interve
by 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 agoThis 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 agoYou don't see how a service that literally distributes images of (among other things) people, without their express consent, has human rights concerns? Google didn't try control competition by locking down tenor.
- jfrunyon 5y agoNo, it's not a company that hosts and distributes GIFs. It's a company which has a stranglehold on a large portion of the planet's communication, as well as a stranglehold on services which are allowed to interact with that communication.
- sjg007 5y agoWhen I first heard of Giphy I thought it was a weird dumb idea. I was wrong. It allows competitive intelligence inside other apps.
- jfrunyon 5y agoLooking at a single business in isolation is not sound financial reasoning.