Facebook is acquiring Giphy for a reported $400M to boost its social platforms

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Facebook Inc. today revealed that it’s acquiring Giphy Inc., the startup behind the GIF animated image sharing platform of the same name, in a deal an Axios report pegged at $400 million.

Giphy was founded in 2013 and has raised around $150 million from investors including Lightspeed Venture Partners. The startup was reportedly valued at about $600 million after its most recent Series D funding round in 2016.

The $400 million reported acquisition value would suggest that the transaction wasn’t too big an exit for Giphy’s investors. But though the sale price is said to value Giphy at less than what it was worth after its last funding round, the deal could have outsized strategic importance for Facebook as it works to retool its product strategy.

Last year, Facebook Chief Executive Officer Mark Zuckerberg laid out a vision to shift the company’s focus from public social media posts to private messaging services. WhatsApp and Messenger are at the heart of that effort. But the two services have proven tricky for Facebook to make money from precisely because of their privacy-oriented feature sets.

That’s the challenge the Giphy acquisition could help address. Giphy makes money by allowing companies to create branded GIF images that consumers can, among other things, include in WhatsApp and Messenger messages. Both services already provide integrations with Giphy that enable users to directly search for animated content from the native interface.

Giphy is also popular among users of Instagram, which likewise integrates directly with the GIF sharing platform. Facebook Vice President of Product Vishal Shah wrote in a blog post today that Instagram accounts for half of the traffic Giphy receives from the social network’s apps. Those apps, in turn, collectively generate half of the GIF sharing platform’s total traffic.

Shah also shared a glimpse into the social network’s plans going forward. The executive wrote that Facebook will more deeply integrate Giphy’s library of GIFs into Instagram, but stressed that the platform will continue to work with other services.

“GIPHY will continue to operate its library (including its global content collection), and we’re looking forward to investing further in its technology and relationships with content and API partners,” Shah wrote. Giphy’s APIs, or application programming interfaces, are used by Twitter Inc., Slack Technologies Inc., and other major services to provide GIF sharing services for their users.

“People will still be able to upload GIFs; developers and API partners will continue to have the same access to GIPHY’s APIs; and GIPHY’s creative community will still be able to create great content,” the executive added.

Photo: Facebook

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