The U.K. competition regulator said on Tuesday that it had directed Meta Platforms Inc., formerly Facebook, to sell social-media animated images company Giphy, after it determined that the deal could harm social-media users and U.K. advertisers.
The Competition and Markets Authority said that the social media platform's acquisition of Giphy would reduce competition between social-media platforms and that the deal has already removed Giphy as a potential challenger in the display advertising market, in line with its provisional findings issued in August.
After consulting with interested business and organizations, it concluded that its competition concerns can only be addressed by the company selling Giphy in its entirety to another buyer.
Stuart McIntosh, chairman of the independent inquiry group, said by requiring Facebook to sell Giphy, we are protecting millions of social media users and promoting competition and innovation in digital advertising.
Giphy allows users to search for, create and share animated images, known as GIFs, which stands for Graphics Interchange Format. When Facebook bought Giphy last year, the company said it planned to integrate it into Instagram and other apps.
The U.K. competition regulator said Tuesday that it had directed Meta Platforms Inc., formerly Facebook, to sell social-media animated images company Giphy, with the social media company considering its options.
According to documents released by the Competition and Markets Authority, Facebook bought Giphy in May 2020, paying $315 million.
The social media platform's acquisition of Giphy would reduce competition between social-media platforms and that the deal has already removed Giphy as a potential challenger in the display-advertising market, according to the provisional findings published in August.
Meta said it disagrees with the decision and that both consumers and Giphy would be better off with its support. It is reviewing the CMA's directive, along with all of its options, including appealing.
Meta and Giphy would add to the millions of people, businesses, developers, and API partners in the U.K. and around the world who use Giphy every day, providing more choices for everyone, a Meta spokesperson said.
After consulting with interested businesses and organizations, the CMA concluded that its competition concerns can only be addressed by the company selling Giphy in its entirety to another buyer.
Stuart McIntosh, chairman of the independent inquiry group, said by requiring Facebook to sell Giphy, we are protecting millions of social-media users and promoting competition and innovation in digital advertising.
Giphy allows users to search for, create and share animated images, known as GIFs, which stands for Graphics Interchange Format. When Facebook bought Giphy last year, the company said it planned to integrate it into Instagram and other apps.
The CMA said that the merger would have increased Facebook's already significant market power, driving more traffic to Facebook sites - which already account for 73% of user time spent on social media in the U.K.
The CMA said that the majority of Facebook's major competitors - including Twitter Inc. TikTok and Snapchat - use Giphy GIFs - could be affected if the social-media giant denied access to the images, or if it changed usage terms such as requiring more user data.
Before Giphy was acquired by Facebook, the regulator said it had launched its own innovative paid advertising business in the U.S., which could compete with Facebook's advertising services, and had been considering expanding to other countries, including the U.K.
The CMA launched an initial investigation in January and began probing the deal in June 2020. In October, Facebook fined 50.5 million pounds $67.2 million, saying it had breached the initial enforcement order in relation to the merger.