The UK’s Competition and Markets Authority (CMA) has instructed Meta to let go of GIPHY, the animated GIF platform which the company acquired in May of last year. Upon its recent investigation, CMA has concluded that the deal “could harm social media users and UK advertisers” by limiting their access to the platform’s GIFS, while driving more traffic to the social media giant’s various subsidiaries such as Facebook, WhatsApp and Instagram.
The regulator also alleges that Meta had acquired GIPHY just when the latter was considering expanding its paid advertising services in several countries including the UK and US. “Facebook terminated Giphy’s advertising services at the time of the merger, removing an important source of potential competition,” the regulator wrote. “The CMA considers this particularly concerning given that Facebook controls nearly half of the GBP7 billion (~RM39 billion) display advertising market in the UK.”
Meta, on the other hand, disagrees with the ruling. It insists that both consumers and GIPHY are “better off” with the support of its infrastructure, talent, and resources. “Together, Meta and Giphy would enhance Giphy’s product for the millions of people, businesses, developers and API partners in the UK and around the world who use Giphy every day, providing more choices for everyone,” a Meta spokesperson told Engadget. “We are reviewing the decision and considering all options, including appeal.”
Prior to this, Meta had insisted that the acquisition did not compete with existing services, as it continued to allow rival photo and messaging apps to access GIPHY’s animated GIF library. Furthermore, it also stated that CMA had no jurisdiction on the matter as GIPHY has no operations in the UK and that it had no plans of developing a display advertising product. The UK regulator, in turn, fined Meta US$70 million (~RM294 million) for breaking rules related to the deal by refusing to report required information and changing its chief compliance officer twice without permission.
It appears that Meta won’t be complying with the CMA’s order any time soon, as it aims to appeal against this decision. That being said, the final outcome of this ruling will likely be decided in another several weeks or even months.