The U.K. antitrust watchdog said that Facebook parent Meta Platforms Inc. must sell Giphy in order to address competition concerns, the first time that the regulator has forced a Big Tech firm to unwind an already completed deal.
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The Competition and Markets Authority concluded its in-depth investigation into the tie up and found that the deal with the GIF search engine would reduce competition between social media platforms, it said in a statement Tuesday. The provisional findings that were published in August had led to this conclusion.
The deal for Giphy, completed last year, raised concerns from U.K. regulators from the beginning. The antitrust probe was initially delayed after Facebook ordered to pause plans to integrate the company, sparking a lengthy court battle.
Meta has two options: to appeal or to divest. The decision will be up to the company to appeal to the U.K. Competition and Appeals Tribunal, where it will be heard as a judicial review, not whether the decision is right or wrong. If Meta accepts the decision of the CMA, it will have to find a suitable buyer that will be vetted by the regulators.
Meta said they disagreed with this decision. We are reviewing the decision and considering all options, including appeal. The deal removed the platform as a 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 on social media, as well as control of competitors' access to Giphy GIFs, said Stuart McIntosh, chair of the investigation.
Both sides have had to fight 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 U.S. tech giants a much tougher time as they investigate their market power. Regulators faced a lot of 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.
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