The antitrust watchdog ordered Facebook parent Meta Platforms Inc. to sell Giphy, the first time a global regulator has forced a Big Tech firm to unwind a completed deal. After years of being allowed to swallow smaller rivals with virtually no push back, this is a turnaround.
The Competition and Markets Authority found that last year's $315 million tie up with the GIF search engine will reduce competition between social media platforms, according to a statement Tuesday.
It is the first time a Big Tech firm has been ordered by regulators in Europe and the U.S. to undo an acquisition rather than pay a hefty fine. Meta has two options: to appeal or divest.
The $315 million deal for Giphy was completed last year and raised concerns from U.K. regulators from the beginning. The antitrust probe was initially delayed after officials ordered Facebook to pause plans to integrate the company, sparking a lengthy court battle.
Meta has two options: to appeal or divest.
The company will be able to appeal the decision to the U.K. Competition and Appeals Tribunal, where it will be heard as a judicial review, a court process that looks at how the CMA came to its decision. If Meta accepts the CMA's ruling, it will have to find a suitable buyer that will be vetted by the regulators.
Meta spokeswoman said we disagree with this decision. We are reviewing the decision and considering all options, including appeal. A high risk strategy can be used to close a deal without approval. The EU may fine Illumina Inc. $400 million for completing a deal without permission. Google closed its Fitbit takeover earlier this year with no U.S. or Australian permission. The deal removed the platform as a potential challenger in the display advertising market and that Meta must sell Giphy in its entirety to an approved buyer, according to the watchdog.
Without action, it will allow Facebook to increase its market power in social media even further, through controlling competitors access to Giphy GIFs, according to Stuart McIntosh, chair of the investigation.
Both sides have fought the merger review process. Meta was fined 50.5 million pounds $68 million for failing to update regulators on efforts to hold Giphy separate before getting U.K. merger approval, which Meta later did not appeal. Meta has accused the CMA of being disproportionate and not offering alternatives to divestiture.
Merger watchdogs across Europe are giving US tech giants a much tougher time as they investigate their market power. Regulators faced criticism for allowing Silicon Valley to snap up potential rivals before they make it big. Facebook's takeover of Instagram is often cited as a deal that was waved through by regulators without proper scrutiny.
Other global regulators have not shown as much concern with the deal. Margrethe Vestager's European Commission didn't review the case, while Austria's competition agency is still reviewing it.