After the UK’s competition regulator, the CMA, determined that the takeover could affect social media users and UK advertisers, Meta accepts that it must sell Giphy.
The UK’s competition authority has ordered Facebook and Instagram owner Meta to sell the GIF library Giphy.
The Competition and Markets Authority (CMA) stated that the verdict was “final.”
The move followed a lengthy campaign by Meta to overturn a CMA judgment from the previous year, which stated that the acquisition, which was completed in May 2020, could be detrimental to social media users and UK advertisers.
Meta, which went to court to challenge the verdict on legal grounds, was earlier fined £50 million by the regulator for willfully refusing to comply with its inquiries.
Tuesday, the US social media giant admitted defeat.
A spokeswoman stated, “We are saddened by the CMA’s judgment, but we recognize today’s ruling as definitive.”
“We will collaborate closely with the CMA on the sale of GIPHY.
We are grateful to the GIPHY team during this uncertain period for their business, and we wish them the best of luck.
We will continue to assess options – including acquisitions – to deliver innovation and choice to a greater number of consumers in the United Kingdom and around the world.
To integrate with Instagram, Giphy, a website for creating and sharing animated images known as GIFs, was acquired.
The CMA, however, determined that the purchase could allow Meta to restrict other social media platforms’ access to GIFs, “rendering such sites less appealing to consumers and less competitive.”
In addition, the transaction “removed Giphy as a prospective competitor in the UK display advertising industry, preventing UK businesses from benefiting from innovation in this area,” according to the report.
It revealed its conclusion after a final evaluation concluded: “Giphy’s advertising services had the potential to compete with those of Meta, and would have prompted further innovation from Meta and other market participants.”
However, upon acquisition, Meta discontinued Giphy’s advertising capabilities, losing a potential advertising option for UK firms.
“This is of particular concern to the CMA considering that Meta controls nearly half of the £7 billion display advertising industry in the United Kingdom.”
It was also said that the new purchase of Giphy will be subject to regulatory approval.
