17 December 2021
Facebook's owner company Meta has been told by the UK's Competition and Markets Authority (CMA) to sell Giphy. It made the announcement after the phase 2 investigation of the acquisition that took place last year. It says that if the deal between the two parties is allowed to go through, it would be against anti-competition practices and only strengthen Facebook's existing dominance in the social media and internet market.
Giphy is one of the world's leading destinations for creating and sharing animated GIFs. It was acquired by Facebook last year with intention of integrating the platform with Instagram, another social media app that it owns. CMA believes that the deal would result in competition decrement as it not only can be used to abuse the power but also helps Facebook in eliminating one of its strongest competitors in the display advertising space.
Talking about possible scenarios, CMA said that Facebook could decide to deny or limit other platforms from accessing content provided by Giphy. This can eventually result in more traffic for the company that already enjoys a lion's share of the social media market. This is because Meta not only owns Facebook but also Instagram and WhatsApp. These three platforms alone are said to account for 73% of user time spent on social media in the UK. It added that Meta may even decide to ask for more user data from third parties in exchange for access to Giphy.
Giphy's merger with Facebook owner Meta also means its flourishing display advertising has been eliminated. The regulator says this is dangerous considering the latter already controls more than half of the £7 billion display advertising market in the UK. These are some of the reasons CMA wants Meta to sell Giphy in its entirety to an approved buyer.
The official press release by CMA does not mention any timeline for the sale to occur. It is also safe to assume that Meta will not back down that easily and will surely challenge the verdict. We will keep you posted as any further developments will take place.