UK Regulator Orders Meta To Sell Giphy: How Will The Company Respond?

The U.K. government’s Competition and Markets Authority (CMA) has ordered Facebook owner Meta Platforms Inc. FB to sell the graphics interchange format (GIF) files platform Giphy, which it purchased in 2020 for $315 million, stating that the acquisition was designed to reduce competition between social media platforms.

What Happened: The CMA’s order marks the first time an international regulator has mandated a U.S. tech firm to jettison a completed transaction. No other nation's regulatory agency has raised concerns about the acquisition. 

In announcing its decision, the CMA stated that Giphy’s advertising services offered potential competition with Facebook’s display advertising services while encouraging “greater innovation from others in the market, including social media sites and advertisers.”

By acquiring Giphy, the CMA observed, “Facebook terminated Giphy’s advertising services at the time of the merger, removing an important source of potential competition. The CMA considers this particularly concerning given that Facebook controls nearly half of the £7 billion display advertising market  in the UK.”

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Why It Happened: The ruling is the latest initiative by the CMA, which fined Facebook $69.6 million in October for breaching a June 2020 initial enforcement order mandated by the agency during its investigation into the social media giant’s purchase of Giphy.

“By requiring Facebook to sell Giphy, we are protecting millions of social media users and promoting competition and innovation in digital advertising,” the CMA added.

Facebook can appeal the CMA’s ruling to the U.K.’s Competition and Appeals Tribunal. If the company accepts the ruling, it will need to locate a buyer that will require the CMA’s approval.

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

Photo by Dima Solomin on Unsplash