The British competition regulator (CMA, for its acronym in English), has ordered Meta on Tuesday to sell the animated image platform Giphy, which it bought in 2020 for 400 million dollars (405 million euros). The CMA has rejected the arguments of Meta, which had appealed that decision last year, and ends a two-year antitrust battle.
The regulator believes that the purchase of Giphy, the largest provider of gifs for social networks, threatens to “limit the choice of social network users in the United Kingdom and reduce innovation in display advertising” in the country. In his opinion, Meta, the parent company of Facebook, Instagram and WhatsApp, could cut off access to gifs for rivals such as TikTok or Twitter.
The American giant has indicated in a statement its “disappointed” by resolution, although he has stressed that he accepts it as “the last word on this issue”. “We will continue to assess opportunities, including through acquisitions, to bring innovation and choice to more people in the UK and around the world,” she added. Giphy’s purchase was announced by Meta in May 2020.
It is the first time that the CMA determines that a big tech American must divest an acquired company. The decision comes as European regulators intensify scrutiny of Big Tech for alleged anti-competitive practices.
The purchase of Giphy “has already resulted in the elimination of a possible rival in the British advertising market, while giving Meta the ability to further increase its substantial market power in the social media space,” said Stuart McIntosh, chairman of the committee appointed by the CMA to review the case. 7,000 million pounds in the United Kingdom and Facebook controls more than 40% of the business.
The CMA already warned in August 2021 that, before the Giphy purchase by Meta was closed, that company offered paid advertising in the US, which allowed companies to promote their brands through its platform and was considering expanding its advertising services to others. countries, including the United Kingdom, which would have brought a new player in the advertising market and, therefore, a new rival for facebook. “However, Facebook terminated Giphy’s paid advertising partnerships after the deal, meaning an important source of potential competition has been lost.”
Therefore, in the opinion of the regulator, “the only way to avoid the significant impact that the agreement would have on competition is for Giphy to be sold in its entirety to an approved buyer.”
The challenge will now be to find a buyer for the Gifs company. As recounted by the FT, in a presentation to the CMA in August, Giphy said that few companies other than Meta were likely to be interested in buying it.
