Almost two and a half years after Meta (then still Facebook) bought GIF platform Giphy, the tech giant is forced to sell. The UK Competition Authority has ruled that the acquisition is bad for social media and the advertising market.
Meta is disappointed with the decision but accepts it. To whom Giphy will be sold to is not yet clear. Although both companies are American, the British regulator has something to say about them because the parties are active in the United Kingdom. Leaving the UK is not an option for the parties.
CMA has two problems with the acquisition. One problem is the position of social media. The fear is that they will have no or limited access to the GIF library or that they will be obliged to share more data with Meta. In both cases, that could strengthen the position of the tech giant in the UK, is the thought.
The other issue is the advertising market. Prior to the acquisition, Giphy had its own advertising offering and was considering expanding it. More competition in that market can lead to more innovation, the regulator notes. But when Giphy became part of Meta, that came to an end. The CMA finds this particularly disturbing because the tech giant is already very large in the UK advertising market.
Meta bought the company in May 2020 for $ 315 million. This is a much smaller acquisition than that of Instagram ($1 billion) and WhatsApp ($19 billion).
In retrospect, there was a lot of criticism of the permission that Facebook received from the regulators for these acquisitions. That it is now being looked at more critically is evident from the decision of the regulator on the sale of Giphy.
