Meta Forced To Sell Giphy After U.K. Regulator Pressure

Meta Forced To Sell Giphy After U.K. Regulator Pressure

Meta Platforms Inc (NASDAQ:FB) –formerly known as Facebook Inc– is facing a fresh setback in the U.K. as the country’s regulator decided to stop the company’s acquisition of Giphy, the internet’s biggest GIF repository. The watchdog ruled that the purchase could damage competition among social media platforms.

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Allegations

In the decision, the Competition and Markets Authority of the United Kingdom (CMA) claimed that the acquisition of Giphy by Facebook Inc –now Meta Platforms Inc–may increase competition problems both in the supply of advertising in the U.K. as well as on social networking services around the world.

As reported by CNBC, the watchdog has ruled that Facebook must sell Giphy. In summary, the authority indicates that the acquisition would increase traffic to sites owned by Facebook, such as WhatsApp and Instagram, which currently account for 73% of user time spent on social media in the country.

Another point is the impact on the graphics industry. By acquiring Giphy, Meta canceled the advertising services of the GIFs platform at the time, affecting campaigns that took advantage of the format to reach other audiences.

A Meta spokesperson said Tuesday, “We disagree with this decision,” and added, “We are reviewing the decision and considering all options, including appeal.”

"A Very Important Decision"

Peter Broadhurst, a partner at law firm Crowell & Moring, said the CMA’s decision is hugely important.

He emphasized in a statement: “This is the first time the CMA has ever blocked a major digital tech deal and indicates the direction of travel for U.K. regulator’s oversight of similar deals going forward.”

“The decision also suggests that the CMA will not back down in the face of questions and criticism over jurisdiction and overreach –this is exactly the kind of deal that the CMA feels it should be scrutinizing.”

The acquisition had already represented a fine of £50.5 million by the CMA during the first phase of the investigation in October, while the deal was reported to be worth $400 million.

Meta is part of the Entrepreneur Index, which tracks 60 of the largest publicly traded companies managed by their founders or their founders’ families.