After determining that the acquisition could disrupt the digital advertising market and hurt social media users, Britain’s competition regulator has ordered Facebook owner Meta to sell GIF library startup Giphy. The Competition and Markets Authority (CMA) announced the decision on Tuesday, stating that the acquisition of Giphy by Facebook in May of last year would limit competition between social media platforms and in the online display advertising market.
The loss of competition in the industry is “especially troubling considering that Facebook controls over half of the £7 billion (€8.2 billion) display advertising market in the UK,” according to the CMA. The CMA’s judgment may be appealed, according to Facebook, which just relaunched as Meta. It’s not the first time the CMA has gotten involved in a big deal.
It announced in February that Viagogo, a ticket exchange, would have to sell a portion of Stubhub’s foreign business because the two companies’ combination would restrict competition in the UK.
In May 2020, Facebook allegedly paid $400 million (€352 million) for Giphy, a service for creating and sharing animated GIFs, in order to combine it with its photo-sharing app, Instagram. “The Facebook-Giphy partnership has already eliminated a prospective opponent in the display advertising industry,” Stuart McIntosh, chair of the CMA’s independent examination into the Facebook-Giphy partnership, said.
“By compelling Facebook to sell Giphy, we are safeguarding millions of social media users while also encouraging competition and innovation in digital advertising,” he continued. Facebook expressed its dissatisfaction with the outcome. In a statement, a spokeswoman for Meta stated, “We are reviewing the verdict and exploring all options, including appeal.” The agreement was first investigated by the CMA in January of this year, and it was referred to an in-depth examination in April.