Facebook Inc. is being investigated in the UK for its $400 million purchase of Giphy Inc, an American online database and search engine for short looping videos with no sound, that resemble animated GIF files.

A formal investigation was started by the Competition and Markets Authority (CMA) in the UK to evaluate whether this deal impacted competition in the supply of video clips and animated images, as reported by Bloomberg.

Although Giphy was acquired by Facebook on the 15th May 2020, Facebook had to halt its process of integration with Giphy in June because the CMA wanted to investigate whether the deal gave Facebook an unfair advantage over its rivals.

The CMA has set March 25th as the deadline for its initial decision. CMA has also been raising concerns about how mergers and acquisitions by tech giants has had a negative impact on the position of smaller firms in the tech sector. Andrea Coscelli, the Chief Executive Officer at CMA, also explained in October that large tech companies should be scrutinized for such transactions and deals.

However, Facebook argues that this merger is procompetitive and in the interests of everyone in the UK, who uses Giphy and their services. The social media giant hopes to fully cooperate with CMA’s investigation.