UK regulator orders Facebook to sell Giphy

Facebook and Giphy logos

The decision concludes a ten-month long investigation into the acquisition

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1 December 2021 | 0

The UK’s Competition and Markets Authority (CMA) has ordered Facebook, now formally known as Meta, to sell animated image database Giphy.

The decision concludes a ten-month long investigation into the May 2020 acquisition, which saw Facebook purchase Giphy for an estimated $400 million, quickly raising concerns about its impact on the display advertising market.

On Tuesday, the CMA panel reviewing the acquisition concluded that Facebook could use Giphy to increase its dominant social media platform market status even further, already accounting for 73% of user time spent on social media in the UK.

 

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This could be done by either denying or limiting its competitors’ access to Giphy GIFs, or by adjusting the terms of access so that competitors such as TikTok, Twitter, and Snapchat are required to provide Facebook with additional user data to access Giphy GIFs.

Moreover, the CMA found that, before being acquired by Facebook, Giphy’s advertising services had the potential to compete with the tech giant’s own display advertising services, thus encouraging greater innovation from others in the market, social media sites and advertisers alike. By purchasing Giphy, Facebook removed “an important source of potential competition”, allowing it to continue to control nearly half of the UK’s £7 billion display advertising market.

Stuart McIntosh, who chaired the CMA’s independent inquiry group carrying out the phase two investigation, stated that the “tie-up between Facebook and Giphy has already removed a potential challenger in the display advertising market”.

The ruling comes weeks after the CMA fined Facebook £50.5 million for “consciously refusing to report all the required information”, breaching an order imposed during the Facebook-Giphy investigation.

© Dennis Publishing


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