Facebook’s Stealth M&A Puts Focus on Deals Under Antitrust Radar

Facebook did something US technology giants have done countless times before: it bought a smaller company and closed the deal without notifying competition regulators. But this transaction -- the $400 million acquisition of image library Giphy -- was particularly bold. Giphy used a common -- and legal -- maneuver that lets companies avoid scrutiny from merger watchdogs: it paid a dividend to investors. The payment reduced the size of Giphy’s assets enough so that the companies weren’t required to report the deal to antitrust officials. Maneuvers like Giphy’s make policing deals all the more challenging at a time when authorities are being called on to take more aggressive steps to curb the growth of dominant companies, especially in the technology industry. It also raises questions about whether the system used to screen mergers for anticompetitive threats is in need of an overhaul. Researchers who study these so-called stealth deals say they’ve found evidence that some companies are manipulating acquisitions to avoid notifying regulators. Others have documented how unreported deals allow companies to consolidate markets and shut down rival products. These acquisitions present yet another challenge for antitrust cops, who are increasingly strapped as a merger boom stretches their resources.