Meta’s Giphy Loss Sets New Antitrust Precedent

Facebook’s parent company Meta has been ordered by the U.K. competition watchdog to sell Giphy. It marks the first time that the regulator has blocked a deal struck by Big Tech, and the first time the social networking giant has been forced to unwind an acquisition. 

This decision widens the horizon for global regulatory efforts to rein in Big Tech companies.

Giphy is the largest supplier of animated gifs to social networks such as Snapchat, TikTok, and Twitter. Meta paid a whopping $400 million for the company more than two years ago. Reversing that transaction will set a new precedent that tech giants can be made a bit smaller.

Big Tech firms One key argument lawyers for Big Tech firms make in defending their acquisitions from antitrust action is that unwinding such deals is impractical. 

The Giphy case matters because it will give those who are anti-monopoly one solid example of how it is not impractical to unwind big tech deals. 

The U.K. Competition and Markets Authority told Meta in November that the only way to resolve competition concerns was to dispose of Giphy. The regulator said would “protect millions of social media users” and stop Facebook from “increasing its significant power in social media”. 

Meta appealed against the decision, but it was upheld by the Competition Appeal Tribunal in July on five of the six grounds challenged.

The CMA then conducted an “expedited review” of its original ruling, which included new submissions from Giphy and Meta. This week, the CMA announced that 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 demanding more user data from them in order to keep using Giphy.

The CMA found that Meta’s acquisition of Giphy “could allow Meta to limit other social media platforms’ access to GIFs,” and that the deal “removed Giphy as a potential challenger in the U.K. display advertising market, preventing U.K. businesses from benefiting from innovation in this market.”

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 ruling won’t deter Meta from trying to buy other companies, the company says. 

Experts say that while European regulators operate with wider powers and stronger rules than their U.S. counterparts, the Giphy decision will still reverberate in America. 

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