Finally, what was already an open secret was confirmed. The UK Competition and Markets Authority (CMA) has ordered Meta, Facebook’s parent company, to sell Giphy. The novelty was advanced by Financial times on Monday and it became official this Tuesday through an official statement Of the entity.
British regulators consider Facebook’s purchase of Giphy threatens competition in the world of social networks; but they also assure that it has removed from the market a potential competitor in the segment of on-screen display advertising.
What the UK authorities are raising is neither new nor surprising. Last August they had already reached similar conclusions in their preliminary considerations. Nevertheless, it remained to know the final decision and its impact on the agreement originally signed in May 2020. Recall that at that time Facebook announced the acquisition of Giphy for 400 million dollars.
After consulting with interested companies and organizations, and evaluating alternative solutions (known as “remedies” [compensaciones]) filed by Facebook, the CMA has concluded that its competition concerns can only be addressed by Facebook by selling Giphy in its entirety to an approved buyer.
The Competition and Markets Authority of the United Kingdom, on its decision related to Facebook (Meta) and Giphy
According to the CMA, Giphy enhances the already wide dominance of Facebook in the market
The conclusion of the British regulators is that, by controlling Giphy, Meta can limit —Or directly deny— the access of other social networks to the popular GIFs platform. This would give it the advantage of increasing traffic to its header services (Facebook, Instagram and WhatsApp), which already account for 73% of UK users’ online time.
They also indicate that the company led by Mark Zuckerberg could take an even more contentious stance. It would consist of allowing competitors such as Snapchat, TikTok or Twitter to use Giphy GIFs, as long as they deliver more data from their users.
“By requiring Facebook to sell Giphy, we are protecting millions of social media users and promoting competition and innovation in digital advertising,” said Stuart McIntosh, chairman of the independent research group that conducted the research for the CMA.
Logically, Meta’s response did not wait to express its disagreement with the British decision. “We are reviewing the decision and considering all options, including the appeal.”, said a company spokesman, according to Reuters. This makes it clear that, beyond the determination of the CMA, the story seems far from the end.
Finally, the Competition and Markets Authority also indicates that Facebook has to restore the advertising services offered by Giphy prior to purchase. This is because the platform offered large companies the option of promoting their brands through GIFs; However, this business was eliminated when it was transferred to the social network. And since Meta already controls 50% of UK display advertising, the move is also seen as anti-competitive.