Facebook’s parent company, Meta, has been ordered by the UK’s competition watchdog to sell gif creation site Giphy.
This is the first time the regulator has blocked a deal struck by one of the Silicon Valley giants.
The Competition and Markets Authority, which provisionally ruled in August that a sell-off was the only way to address competition concerns, said the move would “protect millions of social media users”. society” and prevent Facebook from “gaining its considerable power on the social network”.
The CMA opened an investigation last year into Meta’s acquisition of Giphy, the largest provider of animated gifs for social networks like Snapchat, TikTok and Twitter, after identifying competition concerns.
The regulator said Meta may cut the gif supply to competitors or request more user data from them in order to continue using Giphy. The CMA said the takeover would also remove a potential competitor from the £7 billion display advertising market, where Facebook is the biggest player with around half the market.
The CMA said it was “particularly concerned” about Facebook’s termination of the advertising services of Giphy, which it was poised to expand, at the time of the merger.
“By asking Facebook to sell Giphy, we are protecting millions of social media users and fostering competition and innovation in digital advertising,” said Stuart McIntosh, president of the independent investigative group that carried out the call. CMA’s in-depth investigation into this deal said.
“Without action, it would also allow Facebook to increase its substantial market power on the social network further, by controlling competitors’ access to Giphy gifs.”
Meta, which is considering appealing against the decision, says the deal will be good for Giphy, consumers and businesses.
A spokesperson for Meta said: “We disagree with this decision. “We are reviewing the decision and looking at all options, including an appeal. Both consumers and Giphy get better with the support of our infrastructure, talent, and resources. Together, Meta and Giphy will enhance Giphy’s products for the millions of people, businesses, developers and partners in the UK and around the world who use Giphy every day, providing more choices for users. everyone. ”
Responding to the CMA’s interim findings in August, which indicated that selling off Giphy was the only option, it accused the UK regulator of “engaging in exceeding the accessibility of aliens”.
At the time, Meta said blocking the purchase of Giphy, which is based in New York and has no UK operations, would “send a chilling message to startup entrepreneurs: don’t build startups new companies because you won’t be able to sell them”.
The CMA and Meta were at the forefront of the investigation. In October, the CMA fined Meta £50.5 million for “deliberately” refusing to provide information to prove that it was complying with an order to separate Giphy’s business from Facebook during the investigation.
“This should serve as a warning to any company that thinks it’s over the law,” said Joel Bamford, director of mergers at CMA.
