UK opens formal investigation of Facebook's purchase of Giphy

The UK's competition watchdog launched a formal investigation on Thursday into Facebook's purchase of Giphy over concerns it will stifle competition for animated images.

The Competition and Markets Authority said the investigation's first stage has a deadline of March 25 to decide whether to trigger a more in-depth probe.

The watchdog started examining the deal last year, shortly after Facebook announced its plan to acquire Giphy in a deal reportedly worth $400 million. Giphy's library of short looping videos, or GIFs, is a popular tool for internet users sending messages or posting on social media.

We will continue to fully cooperate with the CMA's investigation," Facebook said in a statement. "This merger is pro-competitive and in the interests of everyone in the UK who uses GIPHY and our services.

Facebook had planned to integrate Giphy's operations with Instagram but the authority last year ordered the companies to keep their businesses separate while it examined the deal.

Half of Giphy's traffic comes from Facebook's apps, which also include Messenger and WhatsApp, Facebook said when it announced the deal.