Facebook fined peanuts after Giphy staff quit and firm didn't tell UK competition regulators
- Reference: 1643995986
- News link: https://www.theregister.co.uk/2022/02/04/facebook_giphy_fine_cma/
- Source link:
The Competition and Markets Authority (CMA) first locked horns with Facebook in 2020, when it demanded more information on the company's proposed [1]$400m buy of Giphy. The sale was [2]subsequently denied clearance last last year.
The latest £1.5m ($2.03m) fine was imposed after three key staffers left Giphy. The CMA had imposed a legal order on Facebook owner Meta (2021 profit: $39bn) forcing the US giant to reveal if any "staff in positions of executive or managerial responsibility and/or whose performance affects the viability of the business" resigned.
[3]
Referring to the tiny sum in a summary issued today
[4]PDF
, the CMA said: "It is not anomalous, nor would it affect Meta materially." It is difficult to see what a non-material fine is supposed to achieve.[5]
[6]
Facebook also ignored the CMA's [7]initial enforcement order [PDF] by hiring replacement staff, instead of asking the regulator's permission first as the order required. A CMA representative would not identify the staffers or their job titles but said the list was of persons with managerial responsibility for the business.
It appears Facebook is treating the CMA's repeated fines over its Giphy buyout as a cost of doing business rather than something to pay attention to. Last year the regulator fined Facebook £50m for [8]deliberately failing to cooperate with its merger probe.
[9]
A few weeks later the CMA announced it would not approve the merger, saying it would harm the display advertising market by [10]lessening competition .
[11]UK competition regulator to Meta's Facebook: Sell Giphy, we will not approve the purchase
[12]Facebook fined £50m in UK for 'conscious' refusal to report info and 'deliberate failure to comply' during Giphy acquisition probe
[13]Facebook's Giphy slurp remains on hold after UK competition regulator demands more info
[14]Search 'middle finger' on Giphy: Basically Facebook's response to UK competition concerns over merger
Last summer Facebook flipped the bird at the CMA for [15]daring to stick its oar into the $400m Giphy buyout, saying the regulator had made "fundamental errors" when it said the acquisition would "harm competition between social media platforms."
Giphy is a platform that hosts GIFs, the animated images. It is integrated into a number of social (and professional) media platforms. Although many of its GIFs are harmless seconds-long clips of cartoons or TV shows, it has a large number of deals inked with brands for using their content – and for getting either snippets from upcoming films or brands' logos in front of its audience of around 200 million annual users.
While the CMA's symbolic fine won't leave Facebook/Meta owner Mark Zuckerberg in tears, his company's share price crashing and [16]wiping $232bn off its value might have made him sit up and pay attention. ®
Get our [17]Tech Resources
[1] https://www.cnbc.com/2020/05/15/facebook-buys-gif-company-giphy-and-plans-to-integrate-it-with-instagram.html
[2] https://www.theregister.com/2020/11/16/facebook_giphy_tribunal_ruling/
[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/legal&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2Yf2wGfEx0ufUFxBRWYNT@QAAAAA&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[4] https://assets.publishing.service.gov.uk/media/61fbc837d3bf7f78e7e15ab1/Meta_Penalty_Decision_-_Non-confidential_Summary.pdf
[5] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/legal&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44Yf2wGfEx0ufUFxBRWYNT@QAAAAA&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[6] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/legal&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33Yf2wGfEx0ufUFxBRWYNT@QAAAAA&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[7] https://assets.publishing.service.gov.uk/media/5ee25e8186650c03f95747d5/Facebook_Giphy_IEO.pdf
[8] https://www.theregister.com/2021/10/20/facebook_cma_fine/
[9] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/legal&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44Yf2wGfEx0ufUFxBRWYNT@QAAAAA&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[10] https://www.theregister.com/2021/11/30/uk_competition_regulator_facebook/
[11] https://www.theregister.com/2021/11/30/uk_competition_regulator_facebook/
[12] https://www.theregister.com/2021/10/20/facebook_cma_fine/
[13] https://www.theregister.com/2020/11/16/facebook_giphy_tribunal_ruling/
[14] https://www.theregister.com/2021/09/09/facebook_cma_giphy/
[15] https://www.theregister.com/2021/09/09/facebook_cma_giphy/
[16] https://www.theregister.com/2022/02/03/facebook_q4_2021/
[17] https://whitepapers.theregister.com/
Nothing like regulators who have all the impact of a wet noodle.
People have feared the concept of a world government. I fear we'll skip world government and go straight to a dystopian corporatocracy. :(
I think that is overstating it's impact.
I fear we already have
Nuff said.
I fear we 've skipped world government and went straight to a dystopian corporatocracy. :(
Don't thank me, I'm just your average grammer nazi
Surely we need a "totting up" system for corporate scofflaws
OK, a few million in fines is chump change to the likes of Facebook. They can afford to ignore regulators.
So, as well as fines, why not have system that says "If your business is fined X times in Y years, then you get an automatic penalty for being a scofflaw". It could be withdrawal of permission to operate in certain markets at all for a number of years, or an automatic fine set at a level that no business could ignore based on a significant percentage of profit or turnover, escalating rapidly if they do it again. So, if you're Facebook you can absorb the first few millions in fines, but the tens of billions in automatic fines for being a scofflaw you couldn't ignore.
We do it in the UK for driving offences, why not for corporate ones?
(For the non-Brits, you can lose your UK driving licence by committing too many relatively minor traffic offences within a sliding window of time. If you accumulate 12 penalty points within a three year period you get an automatic 1 year ban from driving; the minimum for any offence is 3 points, more serious offences carry more points.)
Re: Surely we need a "totting up" system for corporate scofflaws
@Ian Mason "Surely we need a "totting up" system for corporate scofflaws"
Who's to say that will not be the case?
It seems to me that the regulators could look at Facebook's multiple failures to abide by the rules as evidence that they are not fit to buy out Giphy as any promises they make will not be honoured.
Re: Surely we need a "totting up" system for corporate scofflaws
First fine measured in Millions.
Second fine measured in Billions.
Third fine measured in Trillions.
Make all fines attached to the C-level execs that can not be discharged through bankruptcy, they can't be fired/replaced/the fine thus discharged ("You're the captain of this ship, you stay at the helm & steer this thing right or you will *definitely* be going down lashed to the helm."), and the fine must be paid off within a reasonable time (under a year?) before the non-firing/non-replacing bit is lifted.
Steer the ship into one set of rocks, the share holders may forgive you.
Steer it into a second set of rocks, they may strap you to the bowsprit & use as a bumper.
Do it a third time & they'll keelhaul you repeatedly while they consider something truely hideous to do to you for having done it.
Hitting a company like FB for a few million won't even get noticed. Make it a few billion & they'll grunt at the sucker punch in the kidneys. Make it in the trillions & you can damn-well bet your ass they'll form an angry mob howling for your head.
Sure, you are unlikely to pay off a billion dollar fine much less a trillion dollar one, *BUT THAT'S THE POINT*. It's not supposed to be a slap on the wrist, it's supposed to be a punishment to cause you not to do $Action again that triggered the fine in the first place.
Not being able to discharge it via bankruptcy means you won't just change your name, move to some armpit of the world, & escape your obligations. You will be *legally required* to stay at the helm until the fine is paid in full. This will ensure that you are kept being grilled over the coals until the company can earn enough to start paying those shareholders again, start using black ink on the bottom line again, can claw it's way up out of the hole you put it in.
Don't like it? Too bad. Don't do it again.
Sooner or later...
Facebook/Meta is going to stick its neck out too far, and someone with a big enough axe is going to chop it off.
CMA == empty bollocks