The competition watchdog has ordered Facebook’s parent firm Meta to sell Giphy in a “final decision”, marking the first time the regulator has blocked a deal struck by a Big Tech firm.
The Competition and Markets Authority (CMA) ruled that the combination of the two companies would allow Meta to limit other social media platforms’ access to GIFs.
It said the deal, which set Meta back $400m (£290m) two years ago, removed the animated image-making unit as a potential challenger in the UK display advertising market.
Mark Zuckerberg’s Meta controls almost half of the £7bn display advertising market in the UK.
There were also concerns that Meta could also change the terms of access for animated gifs – potentially it requiring customers, such as TikTok or Twitter, to provide more data from UK users in order to access Giphy GIFs.
The CMA first told Meta in November that the only way to get rid of the competition concerns was to dump Giphy, which is used across social media sites such as Snapchat and TikTok.
Meta appealed that decision to the Competition Appeal Tribunal (CAT), who upheld the majority of the CMA’s original decision in July, including that that it had “no hesitation” that the merger substantially reduced dynamic competition.
Over the past three months, an independent CMA panel has analysed additional third-party evidence, as well as new submissions from Meta and Giphy.
Following its review, the CMA concluded Meta would be able to increase its already significant market power by denying or limiting other social media platforms’ access to Giphy GIFs, thereby pushing people to Meta-owned sites.
Meta sites, such as Instagram and WhatsApp, already make up 73 per cent of user time spent on social media in the UK.
The Silicon Valley titan snapped up the photo-sharing app Instagram for $1bn in 2012 and splashed $19bn on buying encrypted messaging platform WhatsApp in 2014.
A spokesperson for Meta said was the company was disappointed by the decision. “We will work closely with the CMA on divesting GIPHY. We are grateful to the GIPHY team during this uncertain time for their business, and wish them every success,” they said.
“We will continue to evaluate opportunities – including through acquisition – to bring innovation and choice to more people in the UK and around the world.”
The CMA, like the European Commission, has a number of ongoing investigations into the likes of Meta, Google and Apple.
More to follow…
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