Giphy will join the Instagram team and see its GIF library further integrated into the app, along with other Facebook products. Giphy will continue to operate its library, Facebook said, and the platform is expected to preserve its branding, per Axios.
Half of Giphy’s traffic already comes from Facebook apps, with Instagram making up a significant bulk of that volume. Giphy is also integrated with rival social networks and communications platforms, including Twitter and Slack. Facebook previously attempted to acquire the company in 2015, but Giphy declined to pursue broader partnership options, according to CNBC.
As advertising revenue begins to take a bigger hit due to the coronavirus pandemic, Facebook is making a significant bet to diversify its toolkit with the reported $400 million Giphy acquisition. The news signals that the social giant could be looking to take advantage of a down period to strengthen its core products, even as scrutiny of M&A at this time is on the rise among some lawmakers. Giphy and Facebook were in discussions prior to the public health crisis, Axios reported, but those talks were centered more on partnerships than an acquisition.
Giphy is incredibly popular as a hosting service for GIFs that people like to share on social media and in messaging apps. The company was last privately valued at $600 million, Axios said. Brands increasingly view GIFs as an opportunity to connect with mobile-minded consumers, and major marketers like Wendy’s, Pepsi and Midol have recently run campaigns using Giphy.
Giphy has also recently expanded into new areas beyond GIFs that could interest marketers, such as a video with sound offering introduced late last year called Giphy Video. Publishers gaining traction amid the pandemic, including John Krasinki’s “Some Good News” program, are active on Giphy Video.
As noted in Axios, Giphy now has access to Facebook’s considerable sales and marketing infrastructure to grow its business. Facebook and Google together commanded more than half of total U.S. digital advertising spend last year, according to eMarketer estimates.
Facebook focusing on integrating Giphy with the Instagram team makes sense. The image-sharing app has been a continued driver of revenue and user growth for Facebook as it has expanded offerings like Stories, the disappearing photo and video messages that share a name with a similar Snapchat feature. GIFs are used commonly in Instagram Stories and among the content creators who keep users engaged with the service.
In the blog post announcing the deal, Facebook did not indicate that outside apps will have their access to Giphy cut off.
“People will still be able to upload GIFs; developers and API partners will continue to have the same access to GIPHY’s APIs; and GIPHY’s creative community will still be able to create great content,” Vishal Shah, VP of product at Instagram, wrote in the post.
Facebook’s dealmaking could still raise a few eyebrows. The company, facing increasing antitrust scrutiny in recent years, has been pressured to divest previous acquisitions like WhatsApp and Instagram.
Business realities during the pandemic might heighten some of those concerns. Sen. Elizabeth Warren, D-Massachusetts, and Rep. Alexandria Ocasio-Cortez, D-New York, last month proposed a “Pandemic Anti-Monopoly Act” that would restrict M&A transactions involving large companies, including businesses with more than $100 million in revenue, Fast Company reported.