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| UK watchdog orders Facebook owner Meta to sell Giphy |
A year and a half after the social media giant first announced it was taking over GIF production and sharing sites, the UK competition authority has officially asked Meta (Facebook's parent company) to drop its acquisition of popular GIF site Giphy.
The Capital Markets Authority said in a press release that it took the step after an investigation found that the acquisition may affect competition between social media platforms. The only way to allay government concerns is if Facebook sells the entire Giphy site to authorized buyers.
The CMA said the acquisition could be used to deny or limit other platforms' access to Giphy's GIFs and increase traffic on Facebook, WhatsApp and Instagram.
There is also concern that it could be used to require other platforms to provide more data to access the GIF. The authorities also believe that Giphy's advertising services can rival Meta. But due to the merger, it was closed.
The connection between Facebook and Giphy eliminates potential competitors in the display ad market. If no action is taken, Facebook will also allow it to significantly increase its influence in the social media market by controlling competitors' access to Giphy.
"By requiring Facebook to sell Giphy, we are protecting millions of social media users and promoting competition and innovation in digital advertising," the agency said.
Britain's Financial Times previously reported that this was the agency's first attempt to crack the full acquisition of the tech giant. Although Sanda can appeal the decision. The UK regulator's decision sets an important precedent for future major technology purchases.
Meta Claim to Sell Giphy
After an initial earnings report out in August said the deal was about to fall off, the committee's decision wasn't entirely surprising.
In response to the decision, Meta said the company is considering all options, including appeals. She added: "Our infrastructure, talent and resources serve consumers and Giphy better. Meta brings Giphy products to the millions, businesses and developers who use Giphy every day in the UK and around the world. It provides more choice for everyone."
Meta had previously disputed the commission's competition concerns. She said that Giphy's advertising business could not become a serious competitor.
In response to an organized investigation, the company argued that Giphy does not have a large audience. When the acquisition was announced, Meta said it had saved 50% of Giphy's total traffic.