Facebook – or rather Facebook’s parent company Meta – has been ordered to sell Giphy by an independent UK regulator.
The social network giant agreed to purchase the popular GIF-sharing platform in May 2020 for $315m. Now the UK’s Competition and Markets Authority (CMA) has issued a directive for Facebook to sell Giphy on anti-competition grounds.
The CMA found that “Facebook’s acquisition of Giphy would reduce competition between social media platforms and that the deal has already removed Giphy as a potential challenger in the display advertising market.”
By denying rival platforms ready access to Giphy’s GIFs, the regulator found that Facebook would be able to increase its already significant market power, which it wields across WhatsApp and Instagram as well as Facebook itself. It also found issue with the potential for Facebook to change its terms of access, and to require the likes of TikTok, Twitter and Snapchat to provide more user data in return for access to Giphy.
The CMA also found that Facebook’s Giphy acquisition denied the potential for greater innovation in the display advertising space. Giphy had launched its own innovative advertising platform prior to the takeover, and was considering expanding it into new markets. This could have provided competition to Facebook’s dominant position, but Facebook promptly shuttered the platform following the acquisition.
The CMA’s report concludes that this imbalance “can only be addressed by Facebook selling Giphy in its entirety to an approved buyer.”
Facebook/Meta may well appeal the decision, and has previously argued that Giphy had “no display advertising product” and “no meaningful audience of its own”.