Facebook owner Meta to sell Giphy after UK watchdog confirms ruling

CMA says takeover of gif creation website limits choice for social media users

Facebook’s parent company, Meta, has been ordered by the UK competition watchdog to sell the gif creation website Giphy, the first time the regulator has blocked a deal struck by a big Silicon Valley company.

The Competition and Markets Authority told Meta in November that the only way to resolve competition concerns was to dispose of Giphy, the largest supplier of animated gifs to social networks such as Snapchat, TikTok and Twitter, which it acquired two years ago for $400m (£290m).

Meta appealed against the decision, which the regulator said would “protect millions of social media users” and stop Facebook “increasing its significant power in social media”, which was upheld by the Competition Appeal Tribunal on five of the six grounds challenged.

After the tribunal’s ruling in July, the CMA conducted an “expedited review” of its original ruling, which included new submissions from Giphy and Meta, and on Tuesday it said it stood by its order to sell the business.

The regulator said Meta would be able to increase its “already significant market power” by cutting off the supply of gifs to rivals, or demand more user data from them in order to keep using Giphy.

Meta said it accepted Tuesday’s CMA decision as the final word on the matter and would sell off Giphy.

The Facebook parent company, which also owns Instagram and the messaging service WhatsApp, accounts for 73% of user time spent on social media in the UK, the CMA said.

The CMA said a takeover would remove a potential competitor from the £7bn UK display advertising market, where Facebook is the biggest player accounting for about half the market.

The watchdog said it was “particularly concerning” that Facebook terminated Giphy’s advertising services, which the company was poised to expand, at the time of the merger.

“This deal would significantly reduce competition in two markets. It has already resulted in the removal of a potential challenger in the UK display ad market, while also giving Meta the ability to further increase its substantial market power in social media,” Stuart McIntosh, the chair of the independent inquiry group that carried out the remittal investigation, said.

“The only way this can be addressed is by the sale of Giphy. This will promote innovation in digital advertising, and also ensure UK social media users continue to benefit from access to Giphy.”

The CMA and Meta have been at loggerheads through the investigation process.

In October, the watchdog fined Meta £50.5m for “deliberately” refusing to supply information after an order to keep Giphy’s business separate from Facebook during the investigation period.

A spokesperson for Meta said: “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 UK and around the world.”


Mark Sweney

The GuardianTramp

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