Why Meta has been ordered to sell GIF platform GIPHY (Updated)
The move is a milestone moment
The CMA’s investigation
Facebookagreed to buy Giphy for $315 millionin May 2020.
Announcing the deal in a blogpost, Vishal Shah, then-Facebook VP of Product, said the GIF-hosting platform would join the Instagram team:
The announcement came amid growing concerns about Facebook’s power.
While the purchase price was small compared to the $19 billion that Facebook paid for Instagram, the GIF site has a vast reach.In 2019, Giphy founder Alex Chung saidthe platform was the second biggest search engine in the world.
A month after Facebook announced the deal, the CMA revealed that it had launched an investigation into the acquisition.
The regulator said it would scrutinize whether the deal would reduce competition in the company’s markets. The CMA also ordered Facebook tonot integrate with Giphy while the probe was ongoing.
Taking action
In August 2021, the CMAreported its initial findings.
The watchdog said the deal would cause “substantial lessening of competition (SLC) in social media and display advertising, harmingsocial mediausers and businesses in the UK.”
The CMA argued that the deal would remove a display advertising competitor in the country. In addition, it said Facebook would gain an unfair advantage over other platforms that use Giphy, such as TikTok and Snapchat. Facebook has disputed the findings.
The CMA also suggested a solution:
In October, the CMA took further action. The regulator announced that it hadfined Facebook $70 millionfor breaching an order imposed during the inquiry.
The CMA has now revealed the results of its investigation. The regulator concluded that its concerns can only be addressed by Facebook selling Giphy to an approved buyer.
Stuart McIntosh, chair of the independent inquiry group, said the ruling would protect both competitors and consumers:
If the sale does go through, it would be a milestone moment in the conflict between big tech and antitrust regulators.
Story byThomas Macaulay
Thomas is a senior reporter at TNW. He covers European tech, with a focus on AI, cybersecurity, and government policy.Thomas is a senior reporter at TNW. He covers European tech, with a focus on AI, cybersecurity, and government policy.
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