Meta ordered to sell Giphy by UK antitrust authorities
Meta has been ordered to unwind its recent acquisition of Giphy by regulators worried about the deal’s impact on competitors.
The UK Competition and Markets Authority said on Tuesday that Meta’s control of the popular search engine for GIFs — short, looping videos and animations — would reduce competition between social media platforms and had already removed one potential rival in the advertising market.
Facebook, as Meta was then known, bought Giphy, reportedly for $400 million, in 2020. It was intending to integrate the service with Instagram, making it easier for people to find relevant GIFs for their stories and direct messages.
In its initial announcement of the deal, Facebook had vowed to grant third parties the same level of access to Giphy’s content as before. Less than a month after the acquisition was announced, however, the CMA said it was looking into it.
In its initial findings published in August, the regulator said that Facebook’s control over Giphy could allow it to cut off other social media sites’ access to GIFs. Giphy’s services currently integrate with platforms such as Twitter (TWTR), Snapchat, Apple’s (AAPL) iMessage and Slack (WORK).
Although far from the largest deal Meta has ever done, the Giphy acquisition is the company’s first high-profile deal to be unwound by government officials.
Facebook said at the time that it disagreed with the CMA’s preliminary findings, arguing its case lacked evidence.
“As we have demonstrated, this merger is in the best interest of people and businesses in the UK — and around the world — who use Giphy and our services,” a spokesperson said in August. “We will continue to work with the CMA to address the misconception that the deal harms competition.”
The finding is a blow to Meta’s aspirations amid intense antitrust scrutiny by governments around the world, and a potential red flag for other Big Tech companies pursuing acquisitions in this regulatory climate.
The CMA said in August that Giphy had been planning to expand its growing advertising business to the United Kingdom before it was bought, a move that could have given UK brands a new way to promote themselves and create a direct challenger to Facebook in the advertising market.
“However, Facebook terminated Giphy’s paid advertising partnerships following the deal, meaning an important source of potential competition has been lost,” the CMA said in a blog post.