The UK competition watchdog flexed its muscles today as it ordered Facebook to sell Giphy, the GIF platform it bought last year for $400 million.
The Competition and Markets Authority (CMA) said its in-depth investigation has concluded that Giphy’s ownership of Facebook has reduced competition in the online advertising market and could reduce competition between social media platforms. The CMA said that only one sale can resolve the issues.
Stuart Macintosh, who led the CMA’s investigation, said: “The collaboration between Facebook and Giphy has already removed a potential challenge in the display advertising market.
“Without action, this would allow Facebook to exert even further its significant market power in social media, by 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.”
A spokesperson for Facebook’s parent company Meta said, ‘We disagree with this decision. We are reviewing the decision and considering all options, including appeals.
“Both consumers and Giphy are better equipped with the support of our infrastructure, talent and resources. Together, Meta and Giphy will enhance Giphy’s product offerings to the millions of people, businesses, developers and API partners in the UK and around the world who do Giphy every day. use, providing more options for all.”
The ruling marks a significant intervention by the CMA. Facebook and Giphy are both based in the US. Given the large UK user base of both Facebook and Giphy, the CMA claimed rights to the deal.
It is relatively rare to order an outright deal. Facebook can now appeal the decision in the UK court system. If it fails it will have to sell Giphy or face legal action.