The UK's Competition and Markets Authority said Friday it was opening a review of the planned purchase and whether "it may result in a substantial lessening of competition within any market or markets within the United Kingdom."
In a deal unveiled in May, Facebook hoped to integrate Giphy, a website that enables users to make and share animated images, or GIFs, and combine it with its photo-sharing app, Instagram.
Among potential problems UK regulators are likely to look at is whether Facebook could potentially mine the data that comes in through Giphy's ongoing relationships with rival apps to see what its competitors are doing and get a leg up on new opportunities.
While half of Giphy's business has come from Facebook and its apps, it also works with rival apps like Tik Tok, Apple's (AAPL) - Get Report iMessage, Signal, and Twitter, (TWTR) - Get Report according to Bloomberg.
And Facebook's declaration that Giphy's relationship with these other apps will not change after the deal has raised concern among critics of the transaction.
The CMA this week issued an enforcement order to Facebook, following up on Friday by launching the first phase of its review, inviting comments from the public and industry experts on the potential impact of the deal.
The American Economic Liberties Project, a Washington antitrust advocacy group. has urged the U.S. Federal Trade Commission to launch its own review of Facebook's deal for Giphy.
At last check Facebook shares were up 1% at $226.62. In 2020 through the close of trading Thursday, the shares were up 9.3%.