With many major sectors totally frozen and reeling from losses, tech’s biggest players are proving themselves to be the exception to the rule yet again. On Friday, Facebook confirmed its plans to buy Giphy, a popular gif search engine, in a deal believed to be worth $400 million.
Facebook has indicated it wants to forge new developer and content relationships for Giphy, but what the world’s largest social network really wants with the popular gif platform might be more than meets the eye. As Bloomberg and other outlets have suggested, it’s possible that Facebook really wants the company as a lens into how users engage with its competitors’ social platforms. Giphy’s gif search tools are currently integrated into a number of messaging platforms, including TikTok, Twitter and Apple’s iMessage.
In 2018, Facebook famously got into hot water over its use of a mobile app called Onavo, which gave the company a peek into mobile usage beyond Facebook’s own suite of apps—and violated Apple’s policies around data collection in the process. After that loophole closed, Facebook was so desperate for this kind of insight on the competition that it paid people—including teens—to sideload an app granting the company root access and allowing Facebook to view all of their mobile activity, as TechCrunch revealed last year.
For lawmakers and other regulatory powers, the Giphy buy could ring two separate sets of alarm bells: one for the further evidence of anti-competitive behavior stacking the deck in the tech industry and another for the deal’s potential consumer privacy implications.
“The Department of Justice or the Federal Trade Commission must investigate this proposed deal,” Minnesota Senator Amy Klobuchar said in a statement provided to TechCrunch. “Many companies, including some of Facebook’s rivals, rely on Giphy’s library of sharable content and other services, so I am very concerned about this proposed acquisition.”
In proposed legislation late last month, Sen. Elizabeth Warren (D-MA) and Rep. Alexandria Ocasio-Cortez (D-NY) called for a freeze on big mergers, warning that huge companies might view the pandemic as a chance to consolidate power by buying smaller businesses at fire sale rates.
In a statement, a spokesperson for Sen. Warren called the Facebook news “yet another example of a giant company using the pandemic to further consolidate power,” noting the company’s “history of privacy violations.”
“We need Senator Warren’s plan for a moratorium on large mergers during this crisis, and we need enforcers who will break up Big Tech,” the spokesperson said.
News of Facebook’s latest moves come just days after a Wall Street Journal report revealed that Uber is looking at buying Grubhub, the food delivery service it competes with directly through Uber Eats.
That news also raised eyebrows among pro-regulation lawmakers who’ve been looking to break up big tech. Rep. David Cicilline (D-RI), who chairs the House’s antitrust subcommittee, called that deal “a new low in pandemic profiteering.”
“This deal underscores the urgency for a merger moratorium, which I and several of my colleagues have been urging our caucus to support,” Cicilline said in a statement on the Grubhub acquisition.
The early days of the pandemic may have taken some of the antitrust attention off of tech’s biggest companies, but as the government and the American people fall into a rhythm during the coronavirus crisis, that’s unlikely to last. On Friday, the Wall Street Journal reported that the Department of Justice and a collection of state attorneys general are in the process of filing antitrust lawsuits against Google, with the case expected to hit in the summer months.
Warren vaulted to the top of the contest in mid-2019, building early excitement by rolling out thoughtful plans for myriad campaign issues, including an aggressive proposal to regulate big technology companies. The idea of reining in big tech was so central to her platform that Warren released an entire Medium post laying our her position and supporting arguments all the way back in May 2019.
“Today’s big tech companies have too much power — too much power over our economy, our society, and our democracy,” Warren wrote at the time. “They’ve bulldozed competition, used our private information for profit, and tilted the playing field against everyone else. And in the process, they have hurt small businesses and stifled innovation.”
Warren favored unwinding tech’s biggest acquisitions, including separating Amazon from Whole Foods, Facebook from WhatsApp and Instagram and Google from Waze and Nest. Unlike her close ally turned 2020 rival Vermont senator Bernie Sanders, Warren didn’t denounce capitalism altogether, instead pushing for a vision of a more regulated industry in which “healthy competition” among tech companies could flourish.
Warren’s campaign raised early red flags for tech’s giants, which are now recalibrating for the threat from Sanders.
Through the 2020 race, the elite upper echelons of tech — executives, venture capitalists and the like — sought a moderate alternative to the economic upheaval they feared would be bad for business, even as their own workers aligned with the contest’s most progressive candidates.
With only two candidates left in the race, Sanders will carry the torch holding big tech’s feet to the fire. And while Silicon Valley took an early interest in Pete Buttigieg, former Vice President Joe Biden has emerged as the post-Super Tuesday candidate for tech’s status quo.
Still, Sanders doesn’t target tech with the same laser-focused specificity as Warren did, instead lumping tech in with his distaste for centralized wealth accrued elsewhere. In a January interview, Sanders even noted that “it is not just the big tech companies” that have profited from lax antitrust regulation, steering the conversation to Wall Street, his favorite foil.
Amazon is an exception. Sanders has a historic dislike of Amazon, which he occasionally extends to the Bezos-owned Washington Post, speculating about “why The Washington Post, which is owned by Jeff Bezos, who owns Amazon, doesn’t write particularly good articles about me” — an ongoing, unfounded criticism he shares with President Trump. Last month, the Vermont senator joined Warren and 13 other Democratic senators in a letter decrying Amazon’s “dismal safety record” and calling for Amazon CEO Jeff Bezos to “overhaul this profit-at-all-costs culture at your company.” The letter followed a report from The Atlantic about Amazon’s track record on worker injuries. Sanders has also proposed higher progressive corporate tax rates on companies “with large gaps between their CEO and median worker pay.” Those tax hikes would apply to companies with a yearly revenue greater than $100 million.
Tech may not fall directly in his crosshairs as often, but the democratic socialist’s signature message is a natural enemy of power brokers in the tech industry, which has consolidated an unprecedented amount of power and capital in American society. Sanders has openly denounced tech’s “monopolistic tendencies” and has long criticized Amazon’s treatment of its rank-and-file workers while pushing for strong unions — increasingly a hot button issue for tech, as the organized labor movement and rise in worker activism make headlines in the tech community.
Whatever happens in the race, the Democratic party’s leftmost flank will have to soldier on without Warren. Her days in the contest are over, but the candidate who Mark Zuckerberg feared would pose an “existential” threat to Facebook left an indelible mark on the 2020 race that neither her supporters nor detractors are likely to forget any time soon.