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December 2, 2021: -The U.K.’s competition watchdog has told Meta that it should sell GIF-sharing platform Giphy.
On Tuesday, the Competition and Markets Authority said the deal could harm social media users and U.K. advertisers. Meta says that it disagrees with the decision and that it’s considering an appeal.
The regulator concluded that Meta’s acquisition of Giphy would reduce competition amid social media platforms. It further said that the deal has already removed Giphy as a potential challenger in the display ad market.
A panel found that Facebook would increase its already significant market power over other social media platforms by denying or limiting other platforms’ access to Giphy GIFs.
This, in turn, would send the traffic to Facebook-owned sites – Facebook, WhatsApp, and Instagram, which account for 73% of user time spent on social media in the U.K., the panel concluded.
Meta could change the terms of access to Giphy’s GIFs, the CMA said. For example, requiring the likes of TikTok, Twitter, and Snapchat to provide more user data to access Giphy GIFs.
Before the deal in May last year, Giphy launched its advertising services. It was considering expanding to countries outside the U.S., which include the U.K. Giphy’s ad services, allowed firms such as Dunkin’ to promote their brands through visual images and GIFs.
The CMA found that Giphy’s ad services would have competed with Facebook’s own display advertising services while encouraging innovation from other social media sites and advertisers.
Facebook closed Giphy’s advertising services at the time of the merger. The CMA said this is a cause for concern, mainly because Facebook controls nearly half of the £7 billion display ad market in the U.K.
In a statement Tuesday, Stuart McIntosh, chair of the independent inquiry group carrying out the investigation, said that the deal has already removed a potential challenger in the display ad market.
In August, the CMA said it had provisionally found Meta’s purchase of Giphy would harm competition amid social media platforms and remove a potential challenger in the display ad market.
At the time, the CMA said it might require the company to unwind the deal, reportedly worth $400 million, and sell off Giphy if its competition concerns are ultimately confirmed.
While the deal was announced, Facebook said it wanted to integrate Giphy into the Instagram app further “so that people can find just the right way to express themselves.”
In October, the CMA had fined Facebook £50.5 million for failing to provide regular updates to show that it complied with an order. It said Facebook “significantly limited the scope of those updates” despite many warnings.
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