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Facebook Owner Meta Must Sell Giphy, U.K. Antitrust Regulator Rules

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This article is more than 2 years old.
Updated Apr 21, 2022, 08:19am EDT

Topline

The U.K.'s competition regulator ordered Facebook’s parent company, Meta, to sell the animated image-sharing platform Giphy on Tuesday, a move that is set to unwind an 19 month-old acquisition and deal a blow to the recently rebranded company.

Key Facts

In a press release, the Competition and Markets Authority (CMA) said its review of Facebook’s acquisition of Giphy found that the deal could harm social media users and U.K. advertisers.

The agency stated that Facebook’s acquisition of the popular gif-sharing platform would reduce competition between social media platforms while also removing Giphy as a potential challenger in the online advertising market.

The CMA’s review also raised concerns that Facebook could leverage the acquisition to increase its market power by denying or limiting other platforms from accessing Giphy’s library of GIFs.

The agency also noted that the acquisition allows Facebook to change the terms of access to the gif-sharing tool, thereby forcing Giphy users on other social platforms such as TikTok, Twitter and Snapchat to give access to more user data.

Forbes has reached out to Facebook for comment, but the company has indicated that it will appeal the decision.

Crucial Quote

Stuart McIntosh, the chairperson of the independent inquiry group that investigated the matter said: “Without action, it will also allow Facebook to increase its significant market power in social media even further, through controlling competitors’ access to Giphy GIFs. By requiring Facebook to sell Giphy, we are protecting millions of social media users and promoting competition and innovation in digital advertising.”

Key Background

Facebook acquired Giphy—a popular online platform for making and sharing animated images, or GIFs—back in May 2020 for a reported price of $400 million. At the time, Facebook announced plans to integrate Giphy into Instagram. The acquisition, which came as Facebook was already facing antitrust scrutiny both in the U.S. and abroad, raised some concerns. The CMA, which initiated a review into the acquisition, fined the social media giant £50 million ($70 million) for purposely concealing information about the acquisition and noted that its preliminary findings suggested that the acquisition should be reversed. Beset by a litany of controversies, Facebook rebranded itself as Meta last month and signaled that it was shifting its focus towards building the so-called metaverse. The company’s CEO Mark Zuckerberg has touted the metaverse as an expansive, immersive digital world that will allow people to connect through virtual reality or augmented reality devices.

Further Reading

Meta ordered to sell Giphy by UK regulator (The Verge)

Facebook-owner Meta told to sell Giphy as British regulator blocks acquisition (CNBC)

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