The U.K.’s competition regulator ordered Facebook’s parent company, Meta, to sell the animated image-sharing platform Giphy on Tuesday, a move that is set to unwind an 19 month-old acquisition and deal a blow to the recently rebranded company.
The Key Facts
In a press release, the Competition and Markets Authority (CMA) said its review of Facebook’s acquisition of Giphy found that the deal could harm social media users and U.K. advertisers.
The agency stated that Facebook’s acquisition of the popular gif-sharing platform would reduce competition between social media platforms while also removing Giphy as a potential challenger in the online advertising market.
The CMA’s review also raised concerns that Facebook could leverage the acquisition to increase its market power by denying or limiting other platforms from accessing Giphy’s library of GIFs.
Also, Giphy users who use other social media platforms, such as Twitter, TikTok or Snapchat, will have to agree to allow Facebook to alter their terms of access for the gif-sharing tools.
SMEFacebook has not yet responded to our request for comment. However, the company indicated it would appeal this decision.
The Crucial Quote
Stuart McIntosh, the chairperson of the independent inquiry group that investigated the matter said: “Without action, it will also allow Facebook to increase its significant market power in social media even further, through controlling competitors’ access to Giphy GIFs. By requiring Facebook to sell Giphy, we are protecting millions of social media users and promoting competition and innovation in digital advertising.”
The Key Background
Facebook acquired Giphy—a popular online platform for making and sharing animated images, or GIFs—back in May 2020 for a reported price of $400 million. Facebook was planning to incorporate Giphy into Instagram at that time. There were some questions about the acquisition which occurred at a moment when Facebook was under antitrust scrutiny in America and internationally. The CMA, which initiated a review into the acquisition, fined the social media giant £50 million ($70 million) for purposely concealing information about the acquisition and noted that its preliminary findings suggested that the acquisition should be reversed. Facebook, which was plagued by numerous controversies last month, rebranded itself Meta and indicated that it would shift its focus to the creation of the metaverse. The company’s CEO Mark Zuckerberg has touted the metaverse as an expansive, immersive digital world that will allow people to connect through virtual reality or augmented reality devices.
The Verge reported that Meta was ordered by the UK regulator to sell Giphy.
Meta, Facebook’s owner, orders Giphy sale (CNBC).