Facebook parent company Meta has been ordered by the UK anti-trust watchdog competition and markets authority (CMA) to sell its GIF creation website GIPHY after a failed appeal.
After Meta purchased Giphy for $400 million in 2020 to integrate it with its other platforms (Whatsapp, Facebook, and Instagram), the CMA was displeased with the acquisition due to fears that the deal could limit other social media platforms’ access to GIFs, which in turn would have made those sites less attractive to users.
In November last year, the UK watchdog then issued the first order to Meta which it stated that its acquisition of GIPHY would stifle competition in the social media landscape and the digital advertising industry, ultimately harming the British public.
It revealed that if it did not take action, the deal would allow Meta to increase its significant market power in social media even further, by controlling competitors’ access to Giphy GIFs.
However, after the order, Meta decided to appeal the decision and went to Competition Appeal Tribunal in January earlier this year. Unfortunately, the social media giant had its appeal ruled out after it was ordered to sell its GIF creation website GIPHY.
Speaking on the recent order by the CMA, a Meta Spokesperson said, “We are disappointed by the CMA’s decision but accept today’s ruling as the final word on the matter.
“We are grateful to the Giphy team during this uncertain time for their business and wish them every success.
“We will continue to evaluate opportunities — including through acquisition — to bring innovation and choice to more people in the UK and around the world.”
Through the sale of GIPHY, the CMA disclosed that it will lead to an increase in innovation in digital advertising, and also ensure that UK social media users continue to benefit from access to Giphy.