UK Antitrust Authorities Ordered Meta to Sell Giphy

After threatening for a long time to break up Facebook (now Meta) because of its huge market power, the UK Competition and Markets Authority ordered the company on Tuesday to unwind its acquisition of Giphy, a platform that allows users to share GIFs because the deal could hurt competitors.

According to regulators, Meta’s control of the popular search engine for short, looping videos and animations reduces competition between social media platforms, claiming it had already removed a potential rival in the advertising market.

In line with its plans to integrate Giphy with Instagram so its users can find relevant GIFs for their stories and messages much easier, Facebook bought the service in 2020, reportedly for $400 million.

Amid the intense antitrust scrutiny by governments around the world, the Giphy acquisition is Meta’s largest and first high-profile deal government officials have tried to reverse, striking blow to its aspirations and raising a potential red flag for other Big Tech companies planning to pursue acquisitions in such regulatory climate.

CMA has initiated a probe into the acquisition deal less than a month after it was announced despite Facebook’s vows to grant third parties the same level of access to Giphy’s content as before.

The regulator said in its initial report in August that Facebook’s control over Giphy could allow the company to cut off other social media- such as Twitter, Snapchat, Slack, and iMessage – sites’ access to GIFs and boost Meta’s significant market power.

The probe resulted in a conclusion that CMA’s competition concerns can only be addressed if Facebook sells Giphy in its entirety to an approved buyer

Meta said on Tuesday that it disagrees with the CMA and is considering all options, including appeal since it believes that both consumers and Giphy are better off with the support of its infrastructure, talent, and resources.

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