UK regulator rules Facebook must sell Giphy due to antitrust concerns

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Last year, Facebook announced its plans to acquire the popular GIF service Giphy in a deal valued at around $400 million. While Facebook (now Meta) had said its goal with the Giphy acquisition was to integrate the service deeply with Instagram, regulators have now ordered Facebook to sell Giphy due to antitrust concerns…

In a press release, the UK’s Competition and Markets Authority said that its investigation has concluded 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.”

According to the CMA, the deal would allow Facebook to “increase its already significant market power” by:

  • denying or limiting other platforms’ access to Giphy GIFs, driving more traffic to Facebook-owned sites – Facebook, WhatsApp, and Instagram – which already account for 73% of user time spent on social media in the UK, or
  • changing the terms of access by, for example, requiring TikTok, Twitter, and Snapchat to provide more user data in order to access Giphy GIFs.

One of the focuses of the investigation was “how the deal would affect the display advertising market.”

The CMA found that Giphy’s advertising services had the potential to compete with Facebook’s own display advertising services. They would have also encouraged greater innovation from others in the market, including social media sites and advertisers. Facebook terminated Giphy’s advertising services at the time of the merger, removing an important source of potential competition.

Ultimately, the CMA concludes that these concerns “can only be addressed by Facebook selling Giphy in its entirety to an approved buyer.” You can read the full details here.

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