Facebook parent company Meta has been ordered by the UK competition regulator to sell Giphy, the online database for gifs it bought in May 2020 for $400 million. The Competition and Markets Authority blocked the acquisition on Tuesday, following an investigation during which it determined the deal could harm social media users and UK advertisers.
The investigation found that by denying other platforms the right to use Giphy gifs, Meta would be driving yet more traffic to Facebook, WhatsApp and Instagram, which together already account for 73% of social media traffic in the UK. It could also require competitors including Snapchat, TikTok and Twitter to have to provide more user data to Meta in order to allow access to Giphy gifs.
“By requiring Facebook to sell Giphy, we are protecting millions of social media users and promoting competition and innovation in digital advertising,” said Stuart McIntosh, the regulator’s chair in a statement.
A spokesperson for Meta said the company disagrees with the decision and is reviewing all its options, including launching an appeal. “Both consumers and Giphy are better off with the support of our infrastructure, talent, and resources,” said the spokesperson in a statement. “Together, Meta and Giphy would enhance Giphy’s product for the millions of people, businesses, developers and API partners in the UK and around the world who use Giphy every day, providing more choices for everyone.”
The CMA’s decision to intervene and block the merger drew praise from consumer rights group Which. “Leaving Meta and other tech giants unchecked to acquire smaller businesses could restrict consumer choice, stifle innovation and raise costs for rival companies, which would be passed on to customers,” said director of policy and advocacy Rocio Concha in a statement.
Tuesday’s decision follows the CMA’s move to slap Meta with a $70 million fine last month, due to the company’s failure to provide updates about whether it was still competing with Giphy rather than integrating it into existing products.