Facebook parent Meta Platforms on Tuesday agreed to sell Giphy after Britain’s competition regulator ruled that the 2020 acquisition of the animated-images platform reduced innovation in the advertising market.
“Meta’s takeover of Giphy could allow Meta to limit other social media platforms’ access to GIFs, making those sites less attractive to users and less competitive,”The Competition and Markets Authority Statement Tuesday.
The watchdog group said that the deal valued at $400 million was not a bad deal. “has removed Giphy as a potential challenger in the UK display advertising market, preventing UK businesses from benefiting from innovation in this market.”
Meta indicated that it would be happy to accept the order. “We are disappointed by the CMA’s decision but accept today’s ruling as the final word on the matter,”A Meta spokesperson Statement. “We will work closely with the CMA on divesting Giphy.”
The regulator blocked the deal in November, arguing that the Instagram and WhatsApp owner would deny or limit competitor’s access to GIFs created on the Giphy platform.
“The deal has already removed Giphy as a potential challenger in the display advertising market,”It stated in a statement that Meta had to be sold when it demanded Meta’s resignation. It found out that Giphy had launched the platform during its probe. “innovative advertising services which it was considering expanding to countries outside the US, including the UK” before the deal, working with companies like Dunkin’ Donuts and Pepsi, to use visual images and GIFS in ads.
CMA discovered that these advertising services are effective. “had the potential to compete with Facebook’s own display advertising services,” “would have also encouraged greater innovation from others in the market, including social media sites and advertisers.” But Meta spiked Giphy’s ad services when it bought the company, “removing an important source of potential competition,”The agency estimated that Meta controls “nearly half” of the £7 billion ($7.9 billion) display advertising market in the UK.
Also among the concerns was that even if Meta didn’t deny access to the GIFs, it could change its terms of service and demand that competitors like TikTok, Twitter and Snapchat “provide more user data in order to access Giphy GIFs.”
Meta appealed the November decision, but it was rejected in large part. Only one of the six arguments submitted by Meta was accepted. Before issuing its ruling, the regulator stated that it had reviewed all new evidence Meta and Giphy submitted in the past three months.
“This deal would significantly reduce competition in two markets,”Stuart McIntosh, chairperson of an independent inquiry committee. “It has already resulted in the removal of a potential challenger in the UK display ad market, while also giving Meta the ability to further increase its substantial market power in social media.”