Facebook just bought Giphy for a cool $400 million - but why?

As an office of meme-lovers, the team here at Axon Garside were intrigued when we heard the news that social media giant Facebook was set to buy GIPHY - the largest library and GIF maker (and a regularly used tool in our office) for $400 million, making it Facebook’s fifth largest known acquisition. 

While many details about the deal haven’t yet been announced, what we do know is that the deal is set to have a substantial impact on social media users across the globe. Here’s what we do know about the GIPHY deal, and what we expect to come out of Facebook’s acquisition in the future. 

Details of the acquisition

Giphy is a huge video library filled with billions of GIFS shared by millions of users around the globe, and it generates most of its revenue through branded content. GIFs themselves have become a staple of internet culture and as a result, GIPHY has become wildly popular - but could Facebook’s acquisition make it profitable?

According to Facebook’s press release on the matter, 50% of GIPHY’s traffic comes from the Facebook family of apps, with half of that generated from Instagram alone. Facebook hopes that bringing Instagram and GIPHY together, they can “make it easier for people to find the perfect GIFs and stickers in Stories and Direct” - whether this is entirely the truth is up for debate, but more on that later.

According to the details we do know, GIPHY will remain autonomous to an extent - it will continue to retain its own branding and library of images, and the integration will largely via the Instagram platform. Undeniably, this is rather big news in the tech world - but what Facebook plans to do with GIPHY is still unclear.

What next? 

It’s fairly common knowledge that Facebook has gained a reputation for being somewhat untrustworthy in recent years, and even been the subject of multiple federal antitrust investigations. There are questions over whether Facebook’s past acquisitions, often accused of being anticompetitive, could haunt its purchase of GIPHY. This is because of concerns over what data Facebook will receive as a result of the acquisition, and what will happen to the data of those partnered with GIPHY before the deal. 

While the nature of this is still unclear, what we can presume is that Facebook will gain further insight into hot topics and trends, by watching how people select GIFs from various platforms around the world. Will Facebook exploit this information for its own development? Who knows. Either way, the company stands to gain a huge amount of value from a platform that can offer so much insight on user behaviour, humour and interests.

Could GIPHY become the future of online advertising?

Possibly. Maybe. Okay - we aren’t sure. But there’s definitely potential.

GIPHY was already being used as a form of advertising and GIFs do have some potential, however, it wasn’t doing too great. But that may be why Facebook made the purchase in the first place. Facebook has a habit of predicting the next big thing, so there’s no denying that Zuckerberg and co will have some clever plans in place for GIPHY. Undoubtedly, it’s going to take some serious work to turn GIFs into a successful advertising product - but if there’s one business we can count on to give it a whirl, it’s Facebook. 

This story will continue to unfold in the coming weeks - keep your eyes peeled for more information. Subscribe to our newsletter to stay on top of the latest news, tech insights and innovations in your industry.