Facebook told to sell Giphy by UK regulator

Facebook bought Giphy in May 2020 for $315 million, according to documents published as part of a review of the deal by the Competition and Markets Authority that’s been ongoing since last year. The regulator said Tuesday that the deal, among other things, had removed Giphy as a potential challenger in the performance-advertising market, in line with its provisional findings released in August.

META can appeal against the decision.

“We disagree with this decision. We are reviewing the decision and considering all options, including appeals,” Meta said in a statement. Consumers and Giphy are better equipped with the infrastructure and resources Meta can provide, the company said. At the time of the deal, Facebook said it would integrate Giphy into its Instagram platform.

The CMA said on Tuesday that after assessing alternative solutions, after consulting with interested businesses and organizations, it had concluded that its competitiveness concerns could be addressed only by the sale of Giphy — which could help users Allows to discover, create and share GIFs – in its entirety.

Facebook said it complied with the regulator’s order to operate Giphy separately and protect its GIF-related activities while the deal was under review.

The decision by the British regulator to halt a deal previously agreed upon by two US companies is an unusual move for the agency, but not unprecedented.

In April 2020, CMA acquired Saber Corp’s rival travel booking service Farelogix Inc. Blocked the alliance with, saying it was antagonistic. The regulator said the deal could reduce innovation in the sector and lead to higher tariffs for some products.

Saber challenged the decision at the UK Competition Appeals Tribunal, a specialized judicial body that hears and decides cases involving competition or economic regulatory issues. The tribunal had backed the CMA’s decision earlier this year. In the interim, Saber terminated the transaction, alleging CMA’s opposition.

“We believe the transaction was not competitive.” At that time the kirpan said.

The CMA said on Tuesday that the Giphy deal could increase Facebook’s already significant market power and drive more traffic to the company’s sites, which it said could account for more of user time spent on social media in the UK. 73% share.

The agency said that most of Meta’s major competitors—including Twitter Inc., ByteDance Ltd’s TikTok and Snap Inc.’s Snapchat—use GIFs found with Giphy. Those sites could be affected if the social media giant chooses to change its terms of use such as denying access to images to its peers or requiring more user data, the CMA said.

The regulator also said that before Giphy was acquired by Facebook, it had launched what the agency described as an innovative paid-advertising business in the US, with the potential to compete with Facebook’s advertising services, and other countries. Was considering expanding. UK

Facebook, for its part, says it offered CMA commitments to preserve access for competitors. The company also argued to the CMA that Giphy was losing money when Facebook bought it and that without the deal, it “did lose enough money from investors to survive,” according to the company filings with the regulator.

The CMA began an investigation into the deal in June 2020, with a preliminary formal investigation in January. It fined Facebook £50.5 million, equivalent to $67.2 million in October, saying it had failed to provide necessary updates outlining compliance with the initial enforcement order regarding the merger review.

This story has been published without modification in text from a wire agency feed