Competition And Markets Authority (CMA), the U.K.’s competition regulator, has directed Meta — formerly known as Facebook — to sell Giphy, the GIF database that it acquired in May 2020 for a reported $315 million.
CMA said in a press release that “the deal could harm social media users and U.K. advertisers” by enabling Facebook to potentially deny or limit other platforms’ access to Giphy GIFs. CMA said Meta-owned sites like Facebook, WhatsApp, and Instagram already account for 73% of user time spent on social media in the U.K.
CMA also concluded the acquisition could affect the national display advertising market, given that Giphy had recently launched ad tools enabling businesses to promote themselves via GIFs. Facebook terminated these tools at the time of the merger, CMA said, “removing an important source of potential competition.” Facebook already controls nearly half of the £7 billion display advertising market in the U.K., according to the organization.
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In October, CMA fined Meta £50.5 million for failing to comply with the organization in the wake of the acquisition, which seeks updates regarding anti-competitive practices while it is undertaking a merger investigation. This marked the first such fine that CMA has ever tendered, it said.
“Both consumers and Giphy are better off with the support of our infrastructure, talent, and resources,” Meta’s EU director of policy communications Robin Koch told The Verge in a statement. “Together, Meta and Giphy would enhance Giphy’s product for 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.”
Facebook said it is considering all options, including an appeal.
