June 24, 2024

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CMA, the UK’s competition watchdog, has ordered Meta to sell Giphy

The UK’s competition watchdog has once again ordered Meta to sell Giphy, a platform for animated photographs.

Following several exchanges with the IT giant since its judgement was originally made public last year, the Competition and Markets Authority (CMA) declared that this decision was final.

The CMA concluded that the gif-making website’s takeover might be detrimental to social media users and advertising.

A representative for Meta said the company was “disappointed” but accepted the verdict.

The decision is the first time the UK has barred a tech giant’s acquisition, signalling a renewed commitment to closely examine digital transactions.

In 2020, Meta acquired Giphy, the largest provider of animated gifs to social media platforms like Snapchat, TikTok, and Twitter.

After looking into the transaction, the CMA issued its initial ruling in November 2021, ordering Meta to get rid of Giphy.

Because Meta, then known as Facebook Inc., refused to cooperate with the CMA during the investigation, it was fined a record-breaking £50.5 million.

Giphy was purchased by Meta with the hope that it would make it easier to find gifs and stickers on Facebook, Instagram, and WhatsApp.

The CMA’s inquiry revealed that the buyout would hurt competition in social media and advertising, despite Meta’s claims that Giphy would be “openly available” to other social networks.

Meta contested this ruling, but in July, the Competition Appeal Tribunal ruled in favour of the CMA on all grounds, with the exception of one that had to do with third-party confidential information.

Following that judgement, the CMA declared it had reconsidered and was sticking by its initial determination that Meta would have to sell Giphy.

It expressed concern that the agreement would hinder innovation in digital display advertising in the UK and limit options for users of social media.

According to Stuart McIntosh, chair of the independent inquiry committee conducting the CMA’s probe, there was no choice except for Meta to sell Giphy.