Giphy used a legal loophole to help Facebook purchase it without drawing regulatory scrutiny.

Facebook has been under increased antitrust scrutiny, with the tech giant being accused of buying up smaller rivals to prevent them from becoming major threats. The company announced it was purchasing Giphy in May 2020, and the deal closed largely without issues, although the UK’s Competition and Markets Authority (CMA) recentlysaid it may force Facebook to sell Giphy.

Despite that recent threat, it’s still somewhat surprising the company was able to purchase Giphy at all, given the level of scrutiny it was already under. According to Bloomberg, that was no accident. In fact, the two companies used a legal loophole specifically to avoid scrutiny.

According to Bloomberg’s sources, Giphy paid its investors a dividend prior to the merger. This lowered the company’s assets, at least on paper, enough to fall below the threshold where the merger would have to be reported to antitrust officials. This allowed the deal to fly under the radar and be closed before anyone was the wiser.

Given the current anti-Big Tech sentiment on the rise, it’s a fair bet the law allowing these stealth mergers to take place will likely come under scrutiny of its own.