The rocky road for the acquisition of GIF provider Giphy by Meta, the company formerly known as Facebook, has become bumpier with the U.K.’s Competition and Markets Authority (CMA) ordering the social media giant to sell the company.
The deal was announced in May last year and is valued at $400 million, Variety understands, and in August this year, CMA provisionally found that Facebook’s 2020 takeover of Giphy would negatively impact competition between social media platforms. In October, the CMA fined Meta (then Facebook) $69.1 million for failing to provide regular updates on its compliance process.
On Tuesday, the CMA concluded that the “acquisition of Giphy would reduce competition between social media platforms and that the deal has already removed Giphy as a potential challenger in the display advertising market.” The panel said that Meta would be able to increase its market power by denying or limiting other platforms’ access to Giphy GIFs and driving more traffic to Facebook, WhatsApp and Instagram, which already account for 73% of user time spent on social media in the U.K.
The panel also found that the merger could change terms of access by requiring TikTok, Twitter and Snapchat to provide more user data in order to access Giphy GIFs. The CMA expressed concern that Meta had terminated Giphy’s display advertising services, which the body described as “innovative” and had the potential to compete it.
“The CMA considers this particularly concerning given that Facebook controls nearly half of the £7 billion [$9.3 billion] display advertising market in the U.K.,” the CMA said in a statement.
“After consulting with interested businesses and organisations – and assessing alternative solutions (known as ‘remedies’) put forward by Facebook – the CMA has concluded that its competition concerns can only be addressed by Facebook selling Giphy in its entirety to an approved buyer,” the statement added.
Stuart McIntosh, chair of the independent inquiry group carrying out the investigation, said: “The tie-up between Facebook and Giphy has already removed a potential challenger in the display advertising market. 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,” McIntosh added.
Variety has reached out to Meta for comment.