Facebook’s parent company Meta has received orders to sell Giphy from the UK Competition and Markets Authority.
The company, then known simply as Facebook, bought the Gif sharing search engine last year for $ 315 million (£ 236 million).
He had plans to integrate Giphy’s vast database of short looping video animations with another of his existing social media platforms, Instagram.
But the CMA found the purchase unfair to competing social media platforms.
Facebook adopted Meta as its new business name in October, but the company’s individual platforms, Facebook, Instagram, and WhatsApp, retain their original identities.
In May 2020, when he announced the acquisition of Giphy, he claimed that 50% of Gif search engine traffic was already coming from Facebook platforms, half of that from Instagram.
But Giphy also provides Gifs to competitors like TikTok, Snapchat, and Twitter.
Gif stands for Graphics Interchange Format, an image format developed in the 1980s to display still and moving images.
And they have become a staple of social media posts and comments.
The CMA said: “After consulting with interested companies and organizations – and evaluating the alternative solutions proposed by Facebook – the CMA concluded that its competition concerns can only be addressed by Facebook selling Giphy in its entirety to. an approved buyer “.
We headed #Facebook selling Giphy after discovering the acquisition could reduce competition between social media platforms and increase Facebook’s already significant market power. pic.twitter.com/yRaPxMR43z
– Competition and Markets Authority (@CMagovUK) November 30, 2021
Stuart McIntosh, who chaired the independent investigation into the acquisition, said without action “it will allow Facebook to further increase its significant market power in social media by controlling competitors’ access to Giphy Gifs.”
“By requiring Facebook to sell Giphy, we protect millions of social media users and foster competition and innovation in digital advertising,” he added.
Experts said the regulator’s decision was significant.
Peter Broadhurst, partner of Crowell & Moring law firm, said: “This is the first time the CMA has blocked a major digital technology deal and points the way forward for the UK regulator’s oversight of similar deals in the future.” .
In its decision, the CMA noted that Giphy’s advertising services had the “potential” to compete with those of Facebook.
“This will cause a lot of uncertainty for companies looking to enter into deals where the parties are not actually competing, but perhaps could do so in the future, particularly where one of them could be large in their market,” Broadhurst said.
But Meta told BBC News: “We disagree with this decision.
“We are reviewing the decision and evaluating all options, including the appeal.
“Both consumers and Giphy are doing better with the support of our infrastructure, our talent and our resources.
“Together, Meta and Giphy would improve the Giphy product for millions of people, companies, developers and APIs [application programming interface] partners in the UK and around the world who use Giphy every day, providing more choices for everyone. “
In June 2020, the CMA sent an execution order to Facebook, effectively blocking any merger of the companies until the investigation is closed.
In August 2021, it announced its interim results: the acquisition “would harm competition between social media platforms and remove a potential challenger in the display advertising market.”
At the time, the CMA warned it “may require Facebook to dissolve the deal and sell Giphy in its entirety.”
But Meta’s lawyers he stated that this provisional finding contained “fundamental errors of law and of fact”.
Seeking to cancel the acquisition “in circumstances where Giphy doesn’t even do business in the UK, not only is the CMA engaging in extraterritorial activities, but the CMA is sending a chilling message to start-up entrepreneurs, ‘Don’t build new company because you won’t be able to sell them, ‘”they said.
- Competition and Market Authority
Facebook may have to sell Giphy, the watchdog warns
- August 12
Facebook’s acquisition of Giphy is under investigation
- June 12, 2020
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