The UK’s Competition and Markets Authority (CMA) has stepped in to order the reversal of Facebook owner Meta’s acquisition of GIF database Giphy, on the basis that the deal reduced competition between social media platforms and already removed Giphy as a challenger in the display ad market.
An independent CMA panel ruled that Meta would be able deny or limit the access of other platforms to Giphy’s GIFs, or change the terms of their access by making them provide more user data in order to access the GIF platform, increasing Meta’s already significant market power.
The decision was also contributed to by the impact the deal could have on the display ad market. Prior to the merger, Giphy launched ad services enabling brands to promote their brands through visual images and GIFs. However, Meta decided to terminate Giphy’s ad services at the time of acquisition, which also concerned the CMA given that it feels Giphy’s services had the potential to compete with Meta’s own display ad services, and that Facebook already controls half of the £7 billion display ad market in the UK.
The CMA consulted interested businesses and organisations, and even received alternative solutions from Meta, but still concluded that that the only solution was for Meta to sell Giphy to an approved buyer.
“The tie-up between Facebook and Giphy has already removed a potential challenger in the display advertising market,” said Stuart McIntosh, Chair of independent inquiry group carrying out the phase two investigation. “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.
“By requiring Facebook to sell Giphy, we are protecting millions of social media users and promoting competition and innovation in digital advertising.”
The latest development follows the CMA’s decision to fine Facebook £50.5 million in October for breaching an order during the investigation into the Giphy acquisition.