Facebook warned by UK watchdog in court clash over Giphy deal

The U.K.’s merger watchdog warned Facebook Inc. that it could go beyond forcing the tech giant to unwind its purchase of image-hosting platform Giphy Inc. if the deal is deemed to be anti-competitive.

As the two clashed in court over the review of the $400 million deal, the Competition and Markets Authority said that some of Facebook’s assets or services might need to be divested “given that Giphy is no longer fully self-standing.” The regulator issued the warning at a London tribunal hearing where Facebook is arguing that the CMA’s restrictions on the tie-up were unreasonable and disproportionate.

Facebook had to pause its integration with Giphy in June after the CMA said it wanted to investigate whether the deal would give the social network too much information on its rivals’ operations. The CMA is yet to decide whether to open a formal merger investigation. The regulator is increasingly voicing concerns about internet giants swallowing up smaller firms. Its Chief Executive Officer Andrea Coscelli said last week that the largest tech companies should face scrutiny for any transaction, no matter how tiny.