What you need to know
- Meta will now have to divest Giphy following the U.K.'s CMA order.
- With Meta acquiring Giphy in 2020, the company ran into issues with the U.K.'s antitrust watchdog in the following year citing potential social media concerns.
- Meta is currently working alongside the CMA as they begin the selling process of Giphy.
Meta has accepted the order given by the U.K. competition to sell GIF maker Giphy.
According to The Verge, the U.K.'s Competition and Markets Authority (CMA) has found that Meta has failed on five of the six objections they raised during their appeal of the order. A Meta spokesperson told The Verge, "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."
This ruling means that Meta will be selling US-based Giphy in its entirety.
While Meta acquired Giphy in 2020 for $400 million, the company ran into issues in the following year. The U.K.'s CMA had ordered Meta to sell Giphy as the antitrust watchdog deemed the acquisition to be potentially harmful to social media users and advertisers in the country. Giphy had been developing its own advertising services, and Meta's takeover could mean that the company could dictate whether or not Giphy could be used elsewhere on social media.
At the time, Stuart McIntosh, chair of the CMA's independent inquiry group, said that Facebook (Meta) could "further increase its already significant market power in relation to rival social media platforms."
There was a slight spark of light for Meta earlier this summer as the Competition Appeal Tribunal (CAT) found inconsistencies with the CMA's investigation, and the decision was made to re-review the case. According to the CAT, the CMA failed to inform Meta of Snapchat's similar acquisition of Gfycat. The CAT was then set to make a decision in October, which we have now come to.
This order should bring about a more stable social media industry for both the consumer and the advertisers apart of it. As The Verge informs, Meta already controls around half of the U.K.'s £7 billion display advertising market.
