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GIPHY Is Facebook's Latest Target

Image via Annie Spratt on Unsplash

Facebook, which was founded on February 4, 2004 by current CEO Mark Zuckerberg and four of his fellow Harvard University students, has grown into one of the most dominant technology companies in the world.

Not only has Facebook grown into one of the most dominant technology companies in the world, it has also grown into one of the most valuable companies based on market capitalization.

It's undeniable that Facebook wouldn't be in the position it is without its aggressive acquisition strategy. Facebook has often come under fire for cloning companies that threaten its dominance or outright acquiring them.

Some of the most popular applications in the world today began as threats to Facebook until the company acquired them. Facebook infamously acquired Instagram for about $1 billion in cash and stock just a month before its IPO in 2012. A couple of years later, Facebook dropped $19 billion in cash and stock to acquire WhatsApp. Some of the other notable acquisitions Facebook has made include Oculus VR, LiveRail and CTRL-labs.

Last week, Facebook made its 84th acquisition, announcing it paid $400 million for gif search engine GIPHY.

"GIPHY, a leader in visual expression and creation, is joining the Facebook company today as part of the Instagram team," Facebook said in a statement. "GIPHY makes everyday conversations more entertaining, and so we plan to further integrate their GIF library into Instagram and our other apps so that people can find just the right way to express themselves."

In a sign of Facebook's dominance, the company noted that 50% of GIPHY's traffic already comes from its family of apps, half of which come from Instagram alone.

Despite the lofty price, Facebook appears to have acquired GIPHY well below its latest valuation of $600 million from its Series D funding round in October 2016. In total, GIPHY had raised about $150 million in funding across five rounds.

As usual, critics of Facebook's growing dominance were quick to call out the company for its latest acquisition.

"Facebook keeps looking for even more ways to take our data," U.S. Senator Josh Hawley said in a statement. "Just like Google purchased DoubleClick because of its widespread presence on the internet and ability to collect data, Facebook wants Giphy so it can collect even more data on us. Facebook shouldn’t be acquiring any companies while it is under antitrust investigation for its past purchases."

Senator Elizabeth Warren was also quick to denounce the acquisition. "Facebook’s acquisition is yet another example of a giant company using the pandemic to further consolidate power - this time it’s a company with a history of privacy violations gaining more control over online communications," her spokesperson said.

With active investigations into Facebook ongoing by the U.S. Department of Justice, the Federal Trade Commission and a group of state attorneys general, the pressure on Facebook is likely to only increase as the company continues to gain dominance through acquisitions.

However, as long as Facebook and other technology giants continue to escape political pressure by paying what amounts to immaterial fines, their strategy of acquiring companies to gain dominance is likely to continue.

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