Facebook has agreed a $400m deal to buy Giphy, giving it control of the online platform’s treasure trove of cat gifs and visual puns, along with reams of data attached to it.
The world’s largest social media group said on Friday that it would buy the New York-based private company, which hosts a search engine of popular animated images that play on loop, “to further integrate their gif library into Instagram and our other apps so that people can find just the right way to express themselves”.
A source familiar with the deal, which was first reported by Axios, said it was valued at about $400m, including compensation such as restricted stock units. The person said that Giphy had initially approached Facebook about a partnership before the pandemic and subsequent conversations turned to an acquisition.
Giphy was last valued at $600m in 2016 and has raised about $150m in venture capital funding from groups including Draper Fisher Jurvetson, Lightspeed Venture Partners and Alphabet’s venture fund GV, according to PitchBook data.
Facebook said its apps already accounted for more than 50 per cent of Giphy’s traffic. But the platform is also used by rival groups such as Twitter and Slack, raising questions about what information Facebook will be able to add to the trove of data it already collects about its users and their online behaviour in order to better target advertising.
Facebook said it would be able to access data about how Giphy’s API — the integration “hook” that third parties can use to plug into its system — is wielded by other platforms, such as the volume of requests made by users. However, it said it would not access any user-specific data.
Facebook said Giphy would continue to operate its library, which users can add to, but that it planned to “invest further in its technology and relationships with content and API partners”.
The acquisition is Facebook’s second major investment in recent weeks, after it bought a $5.7bn stake in Indian telecoms company Reliance Jio in a deal that unites two huge pools of Indian consumers and their data.
It also comes as regulators ramp up their scrutiny of big internet platforms over antitrust concerns.
Facebook tried to buy Giphy in 2015, according to media reports at the time which said that the platform rejected the offer.
Giphy said on Friday that it had already worked with Instagram on several features and that “based on the success of those collaborations (and many others) we know that there are exciting times ahead of us”.
JPMorgan, who advised Giphy on the deal, declined to comment.
Additional reporting by Miles Kruppa in San Francisco