This is the latest in Localogy’s Skate To Where the Puck is Going series. Running semi-weekly, it examines the moves and motivations of tech giants as leading indicators for where markets are moving. Check out the entire series here, and its origin here

Facebook has confirmed that it will acquire iconic gif platform Giphy. Facebook isn’t disclosing the terms but Axios reports that the total valuation is around $400 million (unknown cash & stock deal structure). The Giphy division/team will reside under Instagram, where it already had partnerships and integrations.

According to Crunchbase, Giphy had raised $150.9 million across five rounds, including DFJ Growth, Lightspeed, Betaworks, GV, Lerer Hippeau and more. In the spirit of reporting breaking news, we have a few quick thoughts, with more to follow in the coming days and weeks:

— As often happens with maturity, user growth is harder to maintain given a larger base/denominator. In that sense, this is classic M&A activity for a company at Facebook’s life stage.

— More specifically, attention-economy dynamics create greater challenges in user acquisition and engagement. Buying platforms with built-in audiences is one answer. That was partially behind Facebook’s $1 billion Instagram acquisition, which now looks like a steal though at the time baffled many (the $19B Whats App acquisition is similar but different).

— Another reason for buying Instagram was also to take it off the market, and eliminate a potentially growing threat. In the hypercompetitive attention economy, there could be some of that going on here with Giphy. In other words, will Facebook shut down (or downplay) Giphy distribution to competing social graphs? It claims this won’t be the case, but we’ll see.

— Facebook can’t necessarily buy the loyalties of Giphy users and die-hards, some of whom will backlash new behemoth ownership. But it can create deeper integrations with Facebook proper in terms of gif creation and distribution in the News Feed, Instagram and other properties.

— Moreover, this gives Facebook a greater portion of the stack and thus more ownership of the user, which is the name of the game for social graphs. Media creation now joins its primary role as media distribution (again, just like Instagram), which is something it continues to develop.

— In that sense, the other deal this resembles is Snapchat’s acquisition of Bitmoji. That similarly beefed up Snap’s creation engine to own users on a media-creation level in addition to the media-sharing level. Bitmoji was eventually baked into Snap’s user authentication and identity workflow.

— We could expect similar from Facebook/Giphy. In addition to buying traffic and deeper user engagement, the tech & team could be integrated into Facebook’s own native media creation tools for News Feed, Instagram, Portal, Messenger and across the board.

— For example, the messaging play (Messenger, WhatsApp) could be the hidden gem here, with greater gif creation tools integrated into the messaging workflow and custom keyboard (with lots of sponsored gif integration to follow). It was already doing a smaller version of that.

— All of this is underscored by the demand signals Facebook observes elsewhere in the market (read: TikTok)  The “creation economy” (is that a term yet?) now amplifies the “attention economy” with greater user demand for creating things. That’s not a new phenomenon but is amplified now by the mighty TikTok. Giphy has a similar ethos, including users who spend hours creating things.

We’ll pause there to ruminate more on the deal, its drivers and strategic implications for the rest of the market. All of the above is speculative and a first-reaction. We’ll continue pulling on that string in the coming days and weeks to see where this goes — or could go — for Facebook.

Click here to discover more articles like this and learn more about Localogy