The social media giant says it wants to integrate Giphy’s fun animations into Instagram. Its true ambitions may be far bigger.
Why would anyone pay $400m (£330m) for a library of GIFs?
Sure, internet users love to show their reactions or feelings by posting a looping animation of a furious professional wrestler or tearful reality television star. Alongside emoji, GIFs have become one of the web’s most distinctive demotic languages.
But Giphy, the image-sharing service that has just been bought by Facebook for that amount, has never made any money.
What’s more, Facebook will inherit its endless battle against copyright takedown notices, which may prove expensive.
So what GIFs? Look a little deeper, and Facebook’s decision begins to make sense.
A brief history of GIFs
GIFs have been a lively recurring character in the history of the internet. First created by Steve Wilhite, a computer scientist at CompuServe, GIF stands for “Graphics Interchange Format” (although there are still fierce arguments over whether it is pronounced with a hard or a soft G).
The format became immensely popular because it was efficient at compressing images into a manageable size, at a time when internet access still came through a screeching phone line modem. One particular strength was its ability to show moving images.
A patent dispute drove many developers away to rival formats such as JPEG, and for many years the GIF was in the cold (although it enjoyed a persistent afterlife on the proto-YouTube meme site YTMND). In the late Noughties, however, animated GIFs began to soar in popularity on Tumblr, a blogging site whose youthful, excitable and sometimes censorious atmosphere helped shape modern internet culture.
From there it spread to Twitter, Reddit, Facebook and beyond. Today, for many users, GIFs are a rapid shorthand for all manner of complex emotions and ideas.
How Facebook could freeze its rivals out
The benefits to Instagram of owning this cultural explosion are clear. It needs all the help it can get as it tussles with Snapchat to become teenagers’ first choice for firing off quick visual messages and with TikTok to monopolise their amusement and attention.
But Facebook could also benefit by denying it to others. Many apps, including Twitter, Pinterest, Reddit and Slack, have integrated Giphy into their posting options. And while Facebook has promised that they will keep their access, it does have a history of cutting off rivals.
In 2012, only a few months after outbidding Twitter to acquire Instagram for a then-unprecedented $1bn. Facebook suddenly disabled Twitter’s ability to display Instagram pictures without forcing users to click through. The next year, when Twitter launched its influential but doomed short-form video app Vine, Facebook immediately cut off access to its friend-finding system.
The most obvious target for this kind of behaviour would be TikTok. Having tried to buy the popular Chinese video app back in 2016, Facebook is now reportedly concerned about it, so much so that Mark Zuckerberg now speaks of it as a threat to democracy.
It’s always about the data
The most persuasive reason for Facebook to buy Giphy is depressingly familiar: information.
Giphy has long struggled to make money, and had only just begun working with advertisers before the acquisition. But it had recently added a tracking pixel to some of its GIFs – essentially a tiny fleck of watchful code that sends word back to advertisers when you look at it.
Facebook has made extensive use of such pixels for years, and Giphy could give it a new side entrance into all kinds of online activity. It could, for example, know how many people were requesting GIFs from different apps and how often, giving it a measure of all its rivals’ popularity. In the past, such intelligence has prompted multi-billion-dollar deals.
Similarly, even without knowing users’ real identities, Facebook could track what GIFs they view and post over time, building up a picture of their interests, emotional palette and favourite films TV shows. It could use that data to teach its advertising algorithms to predict Facebook users’ taste: if someone enjoys The Crown, are they more likely to enjoy Poldark or Peppa Pig?
Facebook could also, if it chose, find ways to associate users’ Giphy activity with their actual Facebook profiles. That would give it a very direct portal into their online behaviour, including their social circles (because it would know which Facebook users were viewing each other’s GIFs).
In some cases, that might compensate for restrictions on Facebook’s tracking pixels that are now being imposed by web browsers and regulators across the world.
Will privacy watchdogs and competition regulators allow this? That remains to be seen. If they do, however, $400m might prove to be a steal