After determining that the acquisition could affect social media users and UK advertisers, Britain’s competition regulator has ordered Facebook owner Meta Platforms to sell animated photos app Giphy, inflicting a blow to the US-based internet giant.
The Competition and Markets Authority (CMA) announced the decision on Tuesday, citing preliminary conclusions that Facebook’s purchase of Giphy in May of last year would limit competition between social media platforms and in the display advertising market.
The CMA’s judgement might be appealed, according to Facebook, which was just rebranded as Meta Platforms.
It’s not the first time the CMA has gotten involved in a big deal. It was announced in February that Viagogo will have to sell a portion of Stubhub’s overseas business because the two companies’ combination would restrict competition in the UK.
“The tie-up between Facebook and Giphy has already removed a potential challenger in the display advertising market,” said Stuart McIntosh, chair of the independent investigation on Facebook-Giphy for the CMA.
“By requiring Facebook to sell Giphy, we are protecting millions of social media users and promoting competition and innovation in digital advertising,” he added.
Facebook said it disagreed with the decision.
“We are reviewing the decision and considering all options, including appeal,” a spokesperson for Meta said in a statement.
After hinting in August that it would need Facebook to sell Giphy, the CMA fined the firm roughly $70 million in October for breaching an injunction issued during its probe into the purchase.
The agreement was first investigated by the CMA in January of this year, and it was referred to an in-depth examination in April.
In May 2020, Facebook reportedly paid $400 million for Giphy, a website for creating and sharing animated images, or GIFs, in order to combine it with its photo-sharing app, Instagram. It has defended the deal and its Giphy-related plans to the CMA.
Another major provider of GIFs is Google`s Tenor.
The Competition and Markets Authority (CMA) has been investigating big tech’s monopoly. Google, part of Alphabet Inc., pledged further controls on its use of data from its Chrome browser last week in response to the CMA’s worries about plans to outlaw third-party cookies used by advertisers to monitor users.
The Financial Times first reported the CMA`s plans to block the Facebook-Giphy deal.