Facebook acquired Giphy in 2020 for a reported $400 million, bringing the popular GIF library and search engine into the social network, Instagram, and WhatsApp. However, the UK's Competition and Markets Authority (CMA) has been investigating the deal since. Now, the authority is ordering Meta (formerly Facebook) to sell off Giphy in its entirety.
According to the CMA, Meta could use the platform to stop other providers from accessing GIFs. Furthermore, the investigation found that Giphy was in a position to become a rival in the display advertising market if Facebook had not bought it.
CMA has conducted a three-month review and came up with the following findings that rest on Meta being able to boost its market share with Giphy.
- “Denying or limiting other social media platforms' access to Giphy GIFs, thereby pushing people to Meta-owned sites, which already make up 73% of user time spent on social media in the UK, or
- changing the terms of access – for example, it could require Giphy customers, such as TikTok, Twitter and Snapchat, to provide more data from UK users in order to access Giphy GIFs”
Future
One important detail is that Giphy was never an advertising company in the United Kingdom, doing so only in the US. That means the CMA is arguably getting involved in a part of the business that had no bearing under its authority.
At the same time, it is reasonable to assume that the company would expand advertising to the UK eventually. The CMA references this possibility in its report. As such, the authority says there was a potential to hamper competition by purchasing Giphy.
The CMA is now instructing Meta to sell Giphy to an approved buyer. Meta seems to not be pushing the matter further and will comply with CMA's ruling.
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