UK requires Meta sell Giphy to avoid “GIF monopoly”

Meta was ordered to undo its recent acquisition of Giphy by regulators concerned about the business’s impact on competitors.

The UK Competition and Markets Authority said on Tuesday (30) that Meta’s control over the popular search engine for GIFs – short looping videos and animations – would reduce competition between social media platforms and there was already removed a potential rival in the advertising market.

Facebook (FB), as Meta was known, bought Giphy, reportedly for $400 million, in 2020. The intention was to integrate the service with Instagram, making it easier to search for GIFs relevant to their stories and direct messages.

In its initial announcement of the deal, Facebook promised to grant third parties the same level of access to Giphy’s content as before. Less than a month after the acquisition was announced, however, the CMA said it was investigating the matter.

“After consulting interested companies and organizations – and evaluating alternative solutions presented by Facebook – the CMA concluded that its competition concerns can only be resolved by selling Giphy in full to an approved buyer,” the CMA said in a statement.

The technology company said on Tuesday that it disagrees with the CMA and is considering “all options, including an appeal to court.”

“Both consumers and Giphy are better off with the support of our infrastructure, talent and resources,” said a spokesperson for Meta.

“Together, Meta and Giphy would improve the Giphy product for the millions of people, businesses, developers and API partners in the UK and around the world who use Giphy every day, offering more choice for everyone.”

In its initial findings published in August, the regulator said Facebook’s control over Giphy could allow it to cut other social media sites’ access to GIFs.

Giphy’s services currently integrate with platforms such as Twitter (TWTR), Snapchat, Apple’s iMessage (AAPL) and Slack (WORK).

While far from the biggest deal Meta has ever made, the Giphy acquisition is the company’s first high-profile deal to be undone by government officials.

The discovery is a blow to Meta’s aspirations amid intense antitrust scrutiny by governments around the world, and a potential red flag for other Big Tech companies seeking acquisitions in this regulatory environment.

The CMA said in August that Giphy was planning to expand its growing advertising business into the UK before being bought, a move that could have given British brands a new way to promote themselves and create a direct challenge for Facebook in the marketplace of advertising.

“However, Facebook ended Giphy’s paid advertising partnerships after the deal, meaning that a major source of potential competition was lost,” the CMA said in a blog post.

(Rob North, Brian Fung and Kaya Yurieff contributed to this article).

(Translated text. Click here to read the original, in English)