What you need to know
- Britain's competition regulator has found that Meta's acquisition of Giphy could "harm" social media users and advertisers in the country.
- It has told Meta Platforms to sell the GIF maker.
- Meta is likely to appeal against the authority's decision.
The UK's Competition and Markets Authority (CMA) has directed Facebook's parent company, Meta, to sell GIF maker Giphy. In a press release issued on November 30, the CMA said that an independent panel reviewing the merger has concluded that the deal could harm social media users and advertisers in the country.
Stuart McIntosh, chair of the CMA's independent inquiry group, said in a statement:
The tie-up between Facebook and Giphy has already removed a potential challenger in the display advertising market. By requiring Facebook to sell Giphy, we are protecting millions of social media users and promoting competition and innovation in digital advertising.
The CMA's investigation found that the deal would allow Facebook to further increase its already significant market power in relation to rival social media platforms. For example, Facebook could limit or even deny other platforms' access to Giphy GIFs, which could help drive more users to Meta-owned platforms such as Facebook, Instagram, and WhatsApp. Facebook could also change Giphy's terms of access and require TikTok, Twitter, and Snapchat to provide additional user data to access Giphy GIFs.
Additionally, the CMA found that Giphy's advertising services could compete with Facebook's own display advertising services. Facebook apparently "removed an important source of potential competition" by killing Giphy's advertising services at the time of the merger. The CMA has found this to be "particularly concerning," given the fact that Facebook currently has control over nearly half of the UK's £7 billion display advertising market.
After assessing "remedies" suggested by Meta and holding discussions with interested businesses and organizations, the CMA has concluded that the competition concerns "can only be addressed by Facebook selling Giphy in its entirety to an approved buyer."
Meta has said that it disagrees with the CMA's decision and could soon appeal against it. A Meta spokesperson told Android Central:
We disagree with this decision. We are reviewing the decision and considering all options, including appeal. Both consumers and GIPHY are better off with the support of our infrastructure, talent, and resources. Together, Meta and GIPHY would enhance GIPHY's product for the millions of people, businesses, developers and API partners in the UK and around the world who use GIPHY every day, providing more choices for everyone.
