Meta must sell Giphy again. After a months-long dispute between the British competition authority and the Facebook Group, the final decision has now been made.
The GIF platform Giphy must leave the Meta Group. This has now been determined by the British competition authority Competition and Markets Authority (CMA) in its “final decision“.
The decision was preceded by months of back and forth between Meta and the authority. About a year ago, the authority had already expressed competition concerns about the purchase of the GIF platform.
The history of Meta and Giphy
Meta – then still Facebook – acquired GIF provider Giphy as recently as mid-May 2020. At that time, around 400 million US dollars are said to have flowed.
It should be clear to users of Meta’s subsidiaries Instagram and WhatsApp why Facebook founder Mark Zuckerberg wanted to acquire this company of all companies.
GIFs now play a major role in both Messenger and the social media platform. Whether it’s for communication in chats or for illustrating Instagram Stories.
What is the CMA criticizing?
But the happiness of the Giphy acquisition by Meta did not last long. Because already in November 2021, the British competition authority demanded the sale of the GIF platform. At the time, it criticized “that the deal could harm social media users and British advertisers.”
Meta could restrict access to GIFs for other platform by buying Giphy, it said. This could make the affected platforms “less attractive and less competitive for users,” the CMA said.
In addition, Giphy’s affiliation with Meta could “remove it as a potential challenger in the UK display advertising market.” As a result, U.K. companies “would not be able to benefit from innovation in that market.”
Meta then appealed. But that didn’t help much. Because in July 2022, the CMA’s decision was upheld on five out of six counts.
Meta must now sell again
The UK competition authority has had further evidence analyzed by an independent panel over the past three months.
Following its review, the CMA concluded that Meta would be able to increase its already significant market power.
GIFs are “a key driver of user engagement on social media platforms,” it said. Every month, he said, there are billions of searches for Giphy GIFs worldwide.
Because of its position, Meta could restrict access to Giphy for other platforms. This is problematic, he said, because in the United Kingdom, Meta and its platforms already account for 73 percent of time spent on social media.