Meta Says It Will Sell Giphy per UK Competition Unit’s Order

The UK’s Competition and Markets Authority has rendered a final decision ordering Meta Platforms to sell its Giphy marketplace for animated GIFs. Meta acquired the U.S.-based Giphy in 2020. The CMA subsequently found the purchase anticompetitive, determining the move would stunt innovation in UK display advertising and limit social media choices for consumers. After Meta failed to decisively win an appeal, the matter went back to the CMA, which this week reaffirmed its earlier decision and ordered Giphy sold. Meta said in a statement it is “disappointed by the CMA’s decision,” but won’t pursue further appeal.

Meta said it accepts the ruling as “the final word on the matter,” adding “we will work closely with the CMA on divesting Giphy,” according to a statement reprinted by TechCrunch. The CMA published its decision in November 2021, and Meta subsequently appealed to the Competition Appeal Tribunal (CAT).

In July 2022, the CAT upheld the CMA’s decision on 5 of the 6 challenged grounds, giving Meta a technical victory on only one point, a procedural error the CMA subsequently corrected after the CAT remanded. “Over the past 3 months, an independent CMA panel has analyzed additional third-party evidence, as well as new submissions from Meta and Giphy,” the CMA announced.

Following the review, the CMA concluded Meta “would be able to increase its already significant market power by denying or limiting other social media platforms’ access to Giphy GIFs, thereby pushing people to Meta-owned sites, which already make up 73 percent of user time spent on social media in the UK.”

Another CMA concern was that Meta could change terms of access requiring “Giphy customers, such as TikTok, Twitter and Snapchat, to provide more data from UK users in order to access Giphy GIFs.” The CMA found GIFs are “an important driver of user engagement,” with “billions of searches globally each month for Giphy GIFs.”

“Giphy had been developing its own advertising services,” which were folded into Meta’s offerings, writes The Verge, noting, “the CMA said this was a competition problem given that Meta already controls roughly half of the UK’s £7 billion ($8 billion) display advertising market.”

“The only way this can be addressed is by the sale of Giphy. This will promote innovation in digital advertising, and also ensure UK social media users continue to benefit from access to Giphy,” said Stuart McIntosh, chairman of the independent inquiry group that led the remittal investigation, according to TechCrunch.

Meta, which acquired Giphy in 2020 for $400 million, says it will continue to pursue acquisitions despite the setback. In the U.S., Meta faces a Federal Trade Commission lawsuit aimed at forcing it to spin-off WhatsApp and Instagram.

That case could go to trial in 2024, CNN reports, noting the FTC has also moved to block Meta’s purchase of Los Angeles-based virtual reality technology company Within, “arguing that the deal could give Meta further power to establish a ‘virtual reality empire.’”

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