The U.K.’s Competition and Markets Authority (CMA) has made a final decision and ordered meta, which operates Facebook, WhatsApp and Instagram, to sell GIF provider Giphy. meta will not appeal the decision.
meta’s $400 million acquisition of Giphy in 2020 fell afoul of the CMA, which provisionally found in Aug. 2021 that the takeover of Giphy would negatively impact competition between social media platforms. In Oct. 2021, the CMA fined meta for failing to provide regular updates on the the compliance process it had required. And, in Nov. 2021, the CMA ordered meta to sell Giphy.
meta appealed the decision and the CMA analyzed new submissions from meta and Giphy. It came to the same conclusions as it did when issuing the original sell order: that 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, which already make up 73% of user time spent on social media in the U.K. or, by changing the terms of access that could require Giphy customers, such as TikTok, Twitter and Snapchat, to provide more data from U.K. users in order to access Giphy GIFs.
The CMA also found the merger would negatively impact the display advertising market as meta terminated Giphy’s advertising services upon acquisition, removing a potential ad tool for U.K. businesses. The CMA considered this particularly concerning given meta controls almost half of the £7 billion ($7.9 billion) display advertising market in the U.K.
“We are disappointed by the CMA’s decision but accept today’s ruling as the final word on the matter. 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. We will continue to evaluate opportunities – including through acquisition – to bring innovation and choice to more people in the U.K. and around the world,” a meta company spokesperson told PvNew.
Stuart McIntosh, chair of the independent inquiry group carrying out the investigation, said: “This deal would significantly reduce competition in two markets. It has already resulted in the removal of a potential challenger in the U.K. display ad market, while also giving meta the ability to further increase its substantial market power in social media. The only way this can be addressed is by the sale of Giphy. This will promote innovation in digital advertising, and also ensure U.K. social media users continue to benefit from access to Giphy.”
