On Tuesday, the UK Competition and Markets Authority (CMA) ordered Facebook’s parent company Meta to sell the online database and search engine Giphy, as the $315 million acquisition could harm social media users and UK advertisers.
Facebook moved to buy the online GIF platform in May 2020.
The UK anti-competition watchdog ruled that Facebook’s acquisition of Giphy would reduce competition between social media platforms and that the deal has already removed Giphy as a potential challenger in the display advertising market.
“The tie-up between Facebook and Giphy has already removed a potential challenger in the display advertising market. Without action, it will also allow Facebook to increase its significant market power in social media even further, through controlling competitors’ access to Giphy GIFs,” said Stuart McIntosh, Chair of the independent inquiry group.
“By requiring Facebook to sell Giphy, we are protecting millions of social media users and promoting competition and innovation in digital advertising,” he said in a statement.
The independent panel reviewing the merger concluded that Facebook would be able to increase its already significant market power in relation to other social media platforms by denying or limiting other platforms’ access to Giphy GIFs, driving more traffic to Facebook-owned sites – Facebook, WhatsApp, and Instagram – which already account for 73per cent of user time spent on social media in the UK.
The social network will also change the terms of access by, for example, requiring TikTok, Twitter, and Snapchat to provide more user data in order to access Giphy GIFs.
Before the merger, Giphy had launched innovative advertising services which it was considering expanding to countries outside the US, including the UK.
Giphy’s services allowed companies – such as Dunkin’ Donuts and Pepsi – to promote their brands through visual images and GIFs.
The CMA found that Giphy’s advertising services had the potential to compete with Facebook’s own display advertising services.
In October, the UK watchdog fined Meta around $69.6 million for failing to provide full updates showing its compliance with an order to continue to compete with the GIF company and avoid further integration while the acquisition was under investigation.