Meta accepted a reissued ruling by the UK competition regulator this week to sell its social media animation arm, Giphy.
The decision by the Competitive Markets Authority (CMA) was first announced last year and Meta appealed.
CMA again Declared on October 18, Meta’s acquisition of Giphy could “restrict access to GIFs by other social media platforms, making those sites less attractive to users and less competitive.”
Citing the risk that ownership could lead to competition in social media and display advertising, government officials said Meta must “sell GIPHY in its entirety to a suitable buyer” and that this is a “final decision.” .
“This contract [Meta buying Giphy] The competition in the two markets is greatly reduced. While this has already eliminated potential challengers in the UK display advertising market, it has allowed Meta to further increase its substantial market dominance in social media. Statement of October 18.
“The only way we can address this is by selling Giphy. This will drive innovation in digital advertising and ensure that UK social media users continue to benefit from their visit to Giphy.”
This landmark decision marks the first time global regulators have forcibly decoupled an acquisition by a large tech company. Bloomberg reported.
Meta said it was “disappointed with the CMA’s decision, but accepts today’s decision as final word on this matter.” In a statement to Business Insider.
“We will work closely with the CMA on the sale of GIPHY and will continue to evaluate opportunities, including acquisitions, to bring innovation and choice to more people in the UK and around the world.”
US Big Tech vs. European Regulators
The California-based tech giant, which acquired a controlling stake in Giphy for $400 million in May 2020, was already the parent company of Facebook, Instagram, WhatsApp and Oculus. By removing Giphy from the challenger, the social media company instantly dominated half of his $8 billion online advertising market in the UK.
The CMA began investigating Meta soon after its acquisition of the graphics company, in a review that ran from June 2020 to October 2021.
The CMA originally made a decision in November 2021 ordering Meta to sell Giphy. This is after declaring the merger a threat to competition.
Meta was also fined $70 million after being warned multiple times for failing to report all necessary information about its future competitive practices after acquiring Giphy.according to Business Insider.
Regulators say the American tech giant has the power to restrict access to GIFs by social media rivals such as TikTok, Twitter and Snapchat, and in return force them to provide valuable user data in the UK. said there is.
Post-acquisition, Meta was also able to absorb Giphy’s in-house advertising service into its own system.
meta appeal
Mehta has appealed the UK authorities’ decision with six objections.
A Facebook spokesperson told Reuters last year that it “strongly opposes the CMA’s unjustified decision to penalize Facebook for its best-effort compliance approach. The CMA itself ultimately endorsed it.”
“We will review the CMA’s decision and consider our options.”
Giphy tried to support the acquisition of Meta in its August appeal, explaining that the company’s graphics products had already lost market profitability and needed a buyer after two years of declining uploads.
GIFs “have fallen out of fashion as a content format, with younger users in particular describing them as ‘boomer’ and ‘boring’,” says Giphy. report in a UK application.
However, the UK Competition Appellate Tribunal (CAT) upheld the CMA’s decision last year on five of the six appeals.
The European Commission has already launched several investigations into big tech companies.
The CMA said it plans to impose more fines on tech giants for competition law violations if Congress gives them more powers.
Reuters contributed to this report.
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Bryan S. Jung is a New York City resident with a background in politics and the legal industry. He graduated from Binghamton University.